==============================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                           -------------------------
                                   FORM 10-Q
              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                      For the Quarter Ended March 31, 1999
                                       OR
             ( ) 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. Employer
 File Number        Address and Telephone Number             Identification No.

    1-3526          The Southern Company                       58-0690070
                    (A Delaware Corporation)
                    270 Peachtree Street, N.W.
                    Atlanta, Georgia 30303
                    (404) 506-5000

    1-3164          Alabama Power Company                      63-0004250
                    (An Alabama Corporation)
                    600 North 18th Street
                    Birmingham, Alabama 35291
                    (205) 257-1000

    1-6468          Georgia Power Company                      58-0257110
                    (A Georgia Corporation)
                    241 Ralph McGill Boulevard, N.E.
                    Atlanta, Georgia 30308
                    (404) 506-6526

    0-2429          Gulf Power Company                         59-0276810
                    (A Maine Corporation)
                    One Energy Place
                    Pensacola, Florida 32520-0102
                    (850) 444-6111

    0-6849          Mississippi Power Company                  64-0205820
                    (A Mississippi Corporation)
                    2992 West Beach
                    Gulfport, Mississippi 39501
                    (228) 864-1211

    1-5072          Savannah Electric and Power Company        58-0418070
                    (A Georgia Corporation)
                    600 East Bay Street
                    Savannah, Georgia 31401
                    (912) 644-7171

==============================================================================


<PAGE>


    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 X No____
<TABLE>
<CAPTION>


                                                         Description of                        Shares Outstanding
Registrant                                               Common Stock                          at April 30, 1999      

<S>                                                      <C>                                            <C>        
The Southern Company                                     Par Value $5 Per Share                         697,089,561
Alabama Power Company                                    Par Value $40 Per Share                          5,608,955
Georgia Power Company                                    No Par Value                                     7,761,500
Gulf Power Company                                       No Par Value                                       992,717
Mississippi Power Company                                Without Par Value                                1,121,000
Savannah Electric and Power Company                      Par Value $5 Per Share                          10,844,635


</TABLE>

     This combined Form 10-Q is separately filed by The Southern Company,
Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company and Savannah Electric and Power Company. Information contained
herein relating to any individual company is filed by such company on its own
behalf. Each company makes no representation as to information relating to the
other companies.



<PAGE>
<TABLE>
<CAPTION>


                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                                 March 31, 1999
                                                                                                                              Page
                                                                                                                             Number
<S>                                                                                                                            <C>
DEFINITIONS........................................................................................................            4
                                                    PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements (Unaudited)
Item 2.  Management's Discussion and Analysis of Results of Operations and Financial Condition
             The Southern Company and Subsidiary Companies
                Condensed Consolidated Statements of Income........................................................            6
                Condensed Consolidated Statements of Cash Flows....................................................            7
                Condensed Consolidated Balance Sheets..............................................................            8
                Condensed Consolidated Statements of Comprehensive Income and
                   Accumulated Other Comprehensive Income..........................................................           10
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           11
             Alabama Power Company
                Condensed Statements of Income.....................................................................           21
                Condensed Statements of Cash Flows.................................................................           22
                Condensed Balance Sheets...........................................................................           23
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           25
                Exhibit 1 - Report of Independent Public Accountants...............................................           29
             Georgia Power Company
                Condensed Statements of Income.....................................................................           31
                Condensed Statements of Cash Flows.................................................................           32
                Condensed Balance Sheets...........................................................................           33
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           35
                Exhibit 1 - Report of Independent Public Accountants...............................................           39
             Gulf Power Company
                Condensed Statements of Income.....................................................................           41
                Condensed Statements of Cash Flows.................................................................           42
                Condensed Balance Sheets...........................................................................           43
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           45
             Mississippi Power Company
                Condensed Statements of Income.....................................................................           49
                Condensed Statements of Cash Flows.................................................................           50
                Condensed Balance Sheets...........................................................................           51
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           53
             Savannah Electric and Power Company
                Condensed Statements of Income.....................................................................           58
                Condensed Statements of Cash Flows.................................................................           59
                Condensed Balance Sheets...........................................................................           60
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           62
             Notes to the Condensed Financial Statements...........................................................           65
Item 3.      Quantitative and Qualitative Disclosures about Market Risk............................................           66
                                                      PART II - OTHER INFORMATION
Item 1.  Legal Proceedings.........................................................................................           71
Item 2.  Changes in Securities..................................................................................... Inapplicable
Item 3.  Defaults Upon Senior Securities........................................................................... Inapplicable
Item 4.  Submission of Matters to a Vote of Security Holders....................................................... Inapplicable
Item 5.  Other Information......................................................................................... Inapplicable
Item 6.  Exhibits and Reports on Form 8-K..........................................................................           71
         Signatures ...............................................................................................           73
</TABLE>

                                       3
<PAGE>
<TABLE>
<CAPTION>


                                   DEFINITIONS
TERM                                             MEANING
<S>                                              <C>

affiliates..................................     ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH
ALABAMA.....................................     Alabama Power Company
BEWAG.......................................     Berliner Kraft und Licht AG
CEPA........................................     Consolidated Electric Power Asia Limited
Clean Air Act...............................     Clean Air Act Amendments of 1990
ECO Plan....................................     Environmental Compliance Overview Plan
Energy Act..................................     Energy Policy Act of 1992
EWG.........................................     Exempt wholesale generator
FASB........................................     Financial Accounting Standards Board
FERC........................................     Federal Energy Regulatory Commission
Form 10-K...................................     Combined Annual Report on Form 10-K of SOUTHERN, ALABAMA,
                                                 GEORGIA, GULF, MISSISSIPPI and SAVANNAH for the year ended
                                                 December 31, 1998
FUCO........................................     Foreign utility company
GEORGIA.....................................     Georgia Power Company
GULF........................................     Gulf Power Company
MISSISSIPPI.................................     Mississippi Power Company
Mobile Energy...............................     Mobile Energy Services Company, L.L.C. and Mobile Energy Services
                                                 Holdings, Inc.
OPC.........................................     Oglethorpe Power Corporation
operating affiliates........................     see affiliates
operating companies.........................     see affiliates
PEP.........................................     Performance Evaluation Plan
PSC.........................................     Public Service Commission
SAVANNAH....................................     Savannah Electric and Power Company
SEC.........................................     Securities and Exchange Commission
SOUTHERN....................................     The Southern Company
Southern Energy.............................     Southern Energy, Inc.
                                                 including SOUTHERN subsidiaries managed or controlled by Southern
                                                 Energy
SOUTHERN system.............................     SOUTHERN, affiliates, Southern Energy, and other subsidiaries
SWEB........................................     South Western Electricity plc (United Kingdom)
TVA.........................................     Tennessee Valley Authority

</TABLE>


           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     This Quarterly Report on Form 10-Q includes forward-looking statements
in addition to historical information. The registrants caution that there are
various important factors that could cause actual results to differ materially
from those indicated in the forward-looking statements; accordingly, there can
be no assurance that such indicated results will be realized. These factors
include legislative and regulatory initiatives regarding deregulation and
restructuring of the electric utility industry; the extent and timing of the
entry of additional competition in the markets of SOUTHERN's subsidiaries;
challenges related to Year 2000 readiness; potential business strategies,
including acquisitions or dispositions of assets or internal restructuring, that
may be pursued by the registrants; state and federal rate regulation in the
United States; changes in or application of environmental and other laws and
regulations to which SOUTHERN and its subsidiaries are subject; political, legal
and economic conditions and developments in the United States and in foreign
countries in which the subsidiaries operate; financial market conditions and the
results of financing efforts; changes in commodity prices and interest rates;
weather and other natural phenomena; the performance of projects undertaken by
the non-traditional business and the success of efforts to invest in and develop
new opportunities; and other factors discussed elsewhere herein and in other
reports (including Form 10-K) filed from time to time by the registrants with
the SEC.

                                       4

<PAGE>




                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES



                                       5

<PAGE>
<TABLE>
<CAPTION>



                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                        (Stated in Thousands of Dollars)

                                                                             For the Three Months
                                                                                Ended March 31,
                                                                         ------------------------------
                                                                              1999            1998
                                                                         --------------  --------------

<S>                                                                         <C>             <C>       
OPERATING REVENUES                                                          $2,441,565      $2,494,877
                                                                         --------------  --------------
OPERATING EXPENSES:
Operation--
  Fuel                                                                         512,466         474,328
  Purchased power                                                              274,426         307,999
  Other                                                                        487,069         460,569
Maintenance                                                                    221,286         199,988
Depreciation and amortization                                                  315,081         332,085
Taxes other than income taxes                                                  146,262         147,332
Income taxes                                                                   108,608         135,922
                                                                         --------------  --------------
Total operating expenses                                                     2,065,198       2,058,223
                                                                         --------------  --------------
OPERATING INCOME                                                               376,367         436,654
OTHER INCOME:
Equity in earnings of subsidiaries                                              94,681          34,496
Interest income                                                                 29,486          37,905
Other, net                                                                      26,712          13,191
Income taxes applicable to other income                                        (16,160)          7,024
                                                                         --------------  --------------
INCOME BEFORE INTEREST CHARGES                                                 511,086         529,270
                                                                         --------------  --------------
INTEREST CHARGES AND OTHER:
Interest on long-term debt                                                     166,353         174,277
Interest on notes payable                                                       27,457          28,902
Amortization of debt discount, premium and expense, net                          9,020           6,957
Other interest charges                                                          13,197          19,108
Minority interests in subsidiaries                                              21,343          16,587
Distributions on capital and preferred
  securities of subsidiary companies                                            43,767          35,097
Preferred dividends of subsidiary companies                                      5,633           6,640
                                                                         --------------  --------------
Interest charges and other, net                                                286,770         287,568
                                                                         --------------  --------------

CONSOLIDATED NET INCOME                                                      $ 224,316       $ 241,702
                                                                         ==============  ==============


AVERAGE NUMBER OF SHARES OF
   COMMON STOCK OUTSTANDING (Thousands)                                        698,527         695,051

BASIC AND DILUTED EARNINGS
PER SHARE OF COMMON STOCK                                                        $0.32           $0.35

CASH DIVIDENDS PAID PER SHARE                                                   $0.335          $0.335
   OF COMMON STOCK





                The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
</TABLE>

                                        6
<PAGE>
<TABLE>
<CAPTION>

                                      THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                            (Stated in Thousands of Dollars)
                                                                                                For the Three Months
                                                                                                   Ended March 31,
                                                                                            ------------------------------
                                                                                                 1999             1998
                                                                                            -------------     ------------

OPERATING ACTIVITIES:
<S>                                                                                            <C>              <C>      
Consolidated net income                                                                        $ 224,316        $ 241,702
Adjustments to reconcile net income to net cash provided by
  operating activities--
     Depreciation and amortization                                                               357,985          387,956
     Deferred income taxes and investment tax credits                                             33,503          (10,980)
     Gain on asset sales                                                                          (8,814)            (142)
     Other, net                                                                                  (49,971)          35,213
     Changes in certain current assets and liabilities
        excluding effects from acquisitions --
          Receivables, net                                                                       181,305          390,573
          Fossil fuel stock                                                                      (64,830)         (68,431)
          Materials and supplies                                                                  (3,573)            (255)
          Prepayments                                                                            (38,475)         (46,615)
          Accounts payable                                                                      (321,441)        (341,549)
          Taxes accrued                                                                          (59,004)          52,966
          Other                                                                                  (61,738)         (76,572)
                                                                                            -------------     ------------
Net cash provided from operating activities                                                      189,263          563,866
                                                                                            -------------     ------------
INVESTING ACTIVITIES:
Gross property additions                                                                        (504,592)        (438,163)
Southern Energy business acquisitions, net of cash acquired                                      (38,570)        (154,625)
Sales of property                                                                                  9,192               85
Other                                                                                            (63,126)         (61,192)
                                                                                            -------------     ------------
Net cash used for investing activities                                                          (597,096)        (653,895)
                                                                                            -------------     ------------
FINANCING ACTIVITIES:
Proceeds--
    Common stock                                                                                  23,705           89,372
    Capital and preferred securities                                                             250,000           45,000
    Pollution control obligations                                                                      -           89,990
    Other long-term debt                                                                         348,271          523,300
Retirements/repurchases--
     Preferred stock                                                                             (85,679)             (87)
     First mortgage bonds                                                                       (504,000)        (234,740)
     Other long-term debt                                                                       (223,355)         (46,106)
Special deposits-redemption funds                                                                      7          (89,989)
Notes payable, net                                                                               476,648         (218,465)
Payment of common stock dividends                                                               (233,879)        (232,449)
Miscellaneous                                                                                     38,857           40,643
                                                                                            -------------     ------------
Net cash provided from (used for) financing activities                                            90,575          (33,531)
                                                                                            -------------     ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                         (317,258)        (123,560)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                 871,353          600,820
                                                                                            =============     ============
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                     $ 554,095        $ 477,260
                                                                                            =============     ============

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
  Interest (net of amount capitalized)                                                          $286,368         $307,297
  Income taxes                                                                                   $25,057          $45,480
Southern Energy business acquisitions--
  Fair value of assets acquired                                                                 $ 38,570        $ 154,625
  Less cash paid for common stock                                                                 38,570          154,625
                                                                                            =============     ============
  Liabilities assumed                                                                              $   -            $   -
                                                                                            =============     ============






          The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.

</TABLE>
                                                            7


<PAGE>
<TABLE>
<CAPTION>

                                       THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                             (Stated in Thousands of Dollars)

                                                          ASSETS

                                                                                           At March 31,
                                                                                            1999             At December 31,
                                                                                         (Unaudited)             1998
                                                                                       ----------------     ----------------
UTILITY PLANT:
<S>                                                                                        <C>                  <C>        
Plant in service                                                                           $35,025,995          $35,363,533
Less accumulated provision for depreciation                                                 13,447,110           13,239,008
                                                                                       ----------------     ----------------
                                                                                            21,578,885           22,124,525
Nuclear fuel, at amortized cost                                                                204,353              216,744
Construction work in progress                                                                1,934,253            1,782,482
                                                                                       ----------------     ----------------
Total                                                                                       23,717,491           24,123,751
                                                                                       ----------------     ----------------

OTHER PROPERTY AND INVESTMENTS:
Goodwill, net of accumulated amortization of
     of $121,114 at March 31, 1999 and $105,755 at December 31, 1998                         2,219,991            2,066,765
Property rights, net of accumulated amortization of
     of $180,816 at March 31, 1999 and $169,339 at December 31, 1998                         1,191,456            1,184,734
Equity investments in subsidiaries                                                           1,443,120            1,560,293
Nuclear decommissioning trusts                                                                 573,614              516,719
Miscellaneous                                                                                  679,323              643,743
                                                                                       ----------------     ----------------
Total                                                                                        6,107,504            5,972,254
                                                                                       ----------------     ----------------

CURRENT ASSETS:
Cash and cash equivalents                                                                      554,095              871,353
Special deposits                                                                                65,950               86,592
Receivables, less accumulated provisions for uncollectible accounts
   of $103,324 at March 31, 1999 and $112,511 at December 31, 1998                           1,519,115            1,797,913
Fossil fuel stock, at average cost                                                             316,789              251,974
Materials and supplies, at average cost                                                        515,865              515,715
Prepayments                                                                                    137,213              101,843
Vacation pay deferred                                                                           79,708               80,752
                                                                                       ----------------     ----------------
Total                                                                                        3,188,735            3,706,142
                                                                                       ----------------     ----------------


DEFERRED CHARGES AND OTHER ASSETS:
Deferred charges related to income taxes                                                     1,022,509            1,035,724
Prepaid pension costs                                                                          516,027              489,572
Debt expense, being amortized                                                                  123,806              129,257
Premium on reacquired debt, being amortized                                                    304,594              294,055
Miscellaneous                                                                                  457,133              440,754
                                                                                       ----------------     ----------------
Total                                                                                        2,424,069            2,389,362
                                                                                       ----------------     ----------------

TOTAL ASSETS                                                                               $35,437,799          $36,191,509
                                                                                       ================     ================



           The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
</TABLE>

                                                             8


<PAGE>
<TABLE>
<CAPTION>

                                       THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                             (Stated in Thousands of Dollars)

                                              CAPITALIZATION AND LIABILITIES

                                                                                         At March 31,
                                                                                            1999             At December 31,
                                                                                         (Unaudited)             1998
                                                                                       ----------------     ----------------
CAPITALIZATION:
<S>                                                                                         <C>                  <C>              
Common stock, par value $5 per share -- 
  Authorized -- 1 billion shares 
  Issued -- March 31, 1999: 700,615,244 shares;
       -- December 31, 1998:  699,772,723 shares                                            $3,503,076           $3,498,864
  Paid-in capital                                                                            2,480,408            2,462,116
  Treasury, at cost -- March 31,1999: 1,989,215 shares;
                  -- December 31, 1998:  2,025,536 shares                                      (56,809)             (57,863)
Retained earnings                                                                            3,868,744            3,878,332
Accumulated other comprehensive income                                                         (91,289)              15,400
                                                                                       ----------------     ----------------
                                                                                             9,704,130            9,796,849
Preferred stock of subsidiaries                                                                369,061              369,084
Company or subsidiary obligated mandatorily redeemable
  capital and preferred securities                                                           2,426,965            2,179,440
Long-term debt                                                                               9,952,508           10,471,692
                                                                                       ----------------     ----------------
Total                                                                                       22,452,664           22,817,065
                                                                                       ----------------     ----------------

CURRENT LIABILITIES:
Amount of securities due within one year                                                     1,136,050            1,525,596
Notes payable                                                                                2,362,801            1,827,808
Accounts payable                                                                               689,686            1,026,869
Customer deposits                                                                              125,511              125,078
Taxes accrued--
  Income taxes                                                                                  78,363               49,923
  Other                                                                                        183,516              299,051
Interest accrued                                                                               179,536              233,355
Vacation pay accrued                                                                           112,771              111,611
Miscellaneous                                                                                  485,493              542,836
                                                                                       ----------------     ----------------
Total                                                                                        5,353,727            5,742,127
                                                                                       ----------------     ----------------

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes                                                            4,406,144            4,480,970
Deferred credits related to income taxes                                                       701,461              714,665
Accumulated deferred investment tax credits                                                    715,700              723,393
Employee benefits provisions                                                                   486,317              473,734
Minority interests in subsidiaries                                                             572,942              535,145
Prepaid capacity revenues                                                                       92,288               96,080
Department of Energy assessments                                                                64,191               64,191
Disallowed Plant Vogtle capacity buyback costs                                                  54,086               54,458
Storm damage reserves                                                                           27,028               23,980
Miscellaneous                                                                                  511,251              465,701
                                                                                       ----------------     ----------------
Total                                                                                        7,631,408            7,632,317
                                                                                       ----------------     ----------------

TOTAL CAPITALIZATION AND LIABILITIES                                                       $35,437,799          $36,191,509
                                                                                       ================     ================


           The accompanying notes as they relate to SOUTHERN are an integral part of these condensed statements.
</TABLE>

                                         9


<PAGE>

<TABLE>
<CAPTION>
                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
      CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
                        (Stated in Thousands of Dollars)

                                                                                 For the Three Months
                                                                                   Ended March 31,
                                                                             -----------------------------
                                                                                  1999            1998
                                                                             --------------  -------------

<S>                                                                              <C>            <C>      
Consolidated net income                                                          $ 224,316      $ 241,702
Other comprehensive income:
  Foreign currency translation adjustments                                        (164,137)         3,123
  Less Applicable income taxes                                                     (57,448)         1,093
                                                                             ==============  =============
CONSOLIDATED COMPREHENSIVE INCOME                                                $ 117,627      $ 243,732
                                                                             ==============  =============


</TABLE>
<TABLE>
<CAPTION>


                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
        CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME
                        (Stated in Thousands of Dollars)


                                                                        At March 31,          At December 31,
                                                                         1999                    1998
                                                                     -------------           --------------

<S>                                                                       <C>                      <C>    
Balance at beginning of period                                            $15,400                  $ 7,176
Change in current period                                                 (106,689)                   8,224
                                                                     =============           ==============
BALANCE AT END OF PERIOD                                                 $(91,289)                 $15,400
                                                                     =============           ==============

</TABLE>




                                                                10


<PAGE>





                 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

                   FIRST QUARTER 1999 vs. FIRST QUARTER 1998

RESULTS OF OPERATIONS

Earnings

SOUTHERN's  consolidated  net income for the first quarter of 1999 was $224
million  ($0.32 per share)  compared to $242  million  ($0.35 per share) for the
corresponding  period of 1998.  Earnings for the traditional  business were down
for this quarter due primarily to the timing of GEORGIA's  earnings  under a new
retail rate order,  mild weather and maintenance  expenses.  Under GEORGIA's new
order,  fixed rate reductions and accelerated  amortization are being recognized
ratably throughout 1999. During 1998, variable accelerated depreciation recorded
under the previous  accounting order was primarily  recognized during the higher
revenue summer months. Earnings for the non-traditional  business rose primarily
due to the  improved  earnings  from  CEPA  as a  result  of  gains  related  to
settlement  of claims on  construction  of a power plant  project  and  improved
financial performance.

     SOUTHERN's traditional core business is primarily represented by its five
domestic electric utility operating companies, which provide electric service in
four Southeastern states. Another significant portion of SOUTHERN's business is
its non-traditional business primarily represented by Southern Energy, which
owns and manages international and domestic businesses for SOUTHERN. Businesses
acquired by Southern Energy have been included in the consolidated statements of
income since the date of acquisition. Certain changes in operating revenues and
expenses from the prior period result from such acquisitions. 

Significant income statement items appropriate for discussion include the 
following:


                                                  Increase (Decrease)
                                             -------------------------------
                                                     First Quarter
                                               (in thousands)        %
Operating revenues...........................    $(53,312)          (2.1)
Fuel expense.................................      38,138            8.0
Purchased power expense......................     (33,573)         (10.9)
Other operation expense......................      26,500            5.8
Maintenance expense..........................      21,298           10.6
Equity in earnings of unconsolidated 
   subsidiaries..............................      60,185          174.5


                                       11

<PAGE>


                 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     Operating revenues. Operating revenues for the traditional core business
for the first quarter of 1999 decreased $73 million or 3.7% compared to the same
period of 1998. Despite a slight increase of 1.4% in retail energy sales,
traditional core business revenues decreased for this first quarter of 1999 due
primarily to a retail rate reduction ordered by the Georgia PSC which affected
GEORGIA's revenues. Retail revenues, excluding fuel and any demand-side program
revenues which generally do not affect income, decreased $46 million for the
first quarter of 1999. Operating revenues for Southern Energy increased
approximately $13 million or 2.6% during the first quarter of 1999 when compared
to the corresponding period in 1998. This increase in Southern Energy's
operating revenues is attributed to Southern Energy's acquisition of
Commonwealth Electric's generating business ("New England acquisition") in
December 1998 which was partially offset by the deconsolidation of Mobile
Energy. Effective with the bankruptcy filing in January 1999, Mobile Energy is
accounted for under the equity method, rather than being consolidated as before.
See Note (O) in the "Notes to the Condensed Financial Statements" herein for
further information regarding Mobile Energy. Reference is also made to Item 1 -
BUSINESS - "Non-Traditional Business" and Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Future Earnings Potential" of SOUTHERN in the Form 10-K

     Fuel expense. During the first quarter of 1999, $29 million of the increase
in fuel expenses is related to Southern Energy's New England acquisition in
December 1998 and the remainder of the increase resulted primarily from
increased generation.

     Purchased power expense. Purchased power expenses for the traditional core
business dropped approximately $27 million or 36.3% for the first quarter of
1999. The decrease in these expenses for the traditional core business is mainly
attributed to a decrease in energy purchases related to power marketing
activities during this first quarter of 1999 when compared to the same period in
1998.

     Other operation expense. The first quarter of 1999 increase is mainly
attributed to Southern Energy, which had a $17 million or 26% increase
principally due to Southern Energy's increased business development activities
and the New England acquisition.

     Maintenance expense. The first quarter increase is primarily attributed to
the traditional business. Maintenance expenses in the traditional business
increased approximately $21 million or 12% due to maintenance being performed
during this quarter on generating facilities and transmission and distribution
lines.

     Equity in earnings of unconsolidated subsidiaries. The major increase in
this item reflects the $54 million settlement of Southern Energy's claims
against a contractor relating to the Shajiao C construction project in China and
the improvement in profitability of the Shajiao C operations. The amount of the
settlement of contractor claims is partially offset by other related expenses
and income taxes included in other income accounts.





                                       12

<PAGE>



                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



Future Earnings Potential

The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from energy sales growth to a less regulated, more competitive
environment, with non-traditional business becoming more significant. For
information relating to non-traditional business activities, see Item 1 -
BUSINESS - "Non-Traditional Business" in the Form 10-K.

     With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, SOUTHERN is positioning the
business to meet the challenge of increasing competition. For additional
information, see Item 1 BUSINESS - "Competition" and Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN in the Form
10-K.

     Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be offset. For additional information about the Clean Air Act and
other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of SOUTHERN in the Form 10-K.

     On April 15, 1999, SOUTHERN through its subsidiary Southern Energy,
completed the purchase of 3,065 megawatts of generating assets in California
from Pacific Gas & Electric for approximately $801 million.

     For information relating to Year 2000 readiness, see "YEAR 2000 READINESS"
below.

     The FASB has issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which must be adopted by the year 2000. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SOUTHERN has not yet quantified the
impact of adopting this statement on its financial statements; however, the
adoption could increase volatility in earnings and other comprehensive income.

     Reference is made to Notes (B) through (F), (H) through (M), (O) and (P)
in the "Notes to the Condensed Financial Statements" herein for discussion of
various contingencies and other matters which may affect future earnings
potential. Reference is also made to Part II - Item 1 - "Legal Proceedings"
herein.




                                       13

<PAGE>



                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION




YEAR 2000 READINESS

Year 2000 Challenge

In order to save storage space, computer programmers in the 1960s and 1970s
shortened the year portion of date entries to two digits. Computers assumed, in
effect, that all years began with "19." This practice was widely adopted and
hard-coded into computer chips and processors found in some equipment. This
approach, intended to save processing time and storage space, was used until the
mid-1990s. Unless corrected before the Year 2000, affected software systems and
devices containing a chip or microprocessor with date and time functions could
incorrectly process dates or the systems may cease to function.

     SOUTHERN depends on complex computer systems for many aspects of its
operations, which include generation, transmission, and distribution of
electricity, as well as other business support activities. SOUTHERN's goal is to
have critical devices or software that are required to maintain operations to be
Year 2000 ready by June 1999. Year 2000 ready means that a system or application
is determined suitable for continued use through the Year 2000 and beyond.
Critical systems include, but are not limited to, reactor control systems, safe
shutdown systems, turbine generator systems, control center computer systems,
customer service systems, energy management systems, and telephone switches and
equipment.


Year 2000 Program and Status

SOUTHERN's executive management recognizes the seriousness of the Year 2000
challenge and has dedicated what it believes to be adequate resources to address
the issue. The Millennium Project is a team of employees, IBM consultants, and
other contractors whose progress is reviewed on a monthly basis by a steering
committee of SOUTHERN executives.

     SOUTHERN's traditional business refers to the integrated utility services
within Alabama, Florida, Georgia, and Mississippi. For this traditional
business, the work was divided into two phases. Phase I began in 1996 and
consisted of identifying and assessing corporate assets related to software
systems and devices that contain a computer chip or clock. The first phase was
completed in June 1997. Phase 2 consists of testing and remediating high
priority systems and devices. Also, contingency planning is included in this
phase. Completion of Phase 2 is targeted for June 1999. The Millennium Project
will continue to monitor the affected computer systems, devices, and
applications into the Year 2000.


                                       14
<PAGE>



                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION




     For the traditional business, SOUTHERN has completed more than 85% of the
activities contained in its work plan. The percentage of completion and
projected completion by function are as follows:
<TABLE>
<CAPTION>

                                                       Work Plan 
                                                                Remediation         Projected
                             Inventory        Assessment          Testing          Completion 
<S>                              <C>              <C>                <C>               <C> 
Generation                       100%             100%               85%               6/99
Energy Management                100              100                90                6/99
Transmission and
   Distribution                  100              100               100                1/99
Telecommunications               100              100                82                6/99
Corporate Applications           100              100               100                3/99
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

     For the non-traditional business, Southern Energy has adopted a three-phase
plan to address the Year 2000 challenge at its North American and international
business units. The first phase consists of awareness and planning, inventory
and assessment, and it includes the identification of potentially impacted
systems and an assessment of their individual Year 2000 readiness. The second
phase, which includes testing, remediation, and validation, consists of repair
or replacement of impacted equipment, and verification that those repairs have
addressed the issue. Contingency planning is the third phase, and it includes
backup plans for unexpected events with critical systems, staffing plans for
critical date rollovers, and plans to address external dependencies. Business
units are using Year 2000 readiness information received from suppliers,
including fuel suppliers, to determine if inventory adjustments are needed for
the transition period.

     The following three tables summarize the status of progress of Southern
Energy's North American and international business units as of March 31, 1999.
<TABLE>
<CAPTION>

North American Business Units:

                      Phase                           % Completed         Status          Projected Completion
-------------------------------------------------- ------------------- -------------- ------------------------------
<S>                                                       <C>          <C>            <C>

Awareness and planning, inventory and                     100          Complete       November 30, 1998
 assessment
Testing, remediation, and validation                       63          In progress    June 1, 1999
Contingency planning                                       10          In progress    June 30, 1999
-------------------------------------------------- ------------------- -------------- ------------------------------
</TABLE>


                                       15


<PAGE>


                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

<TABLE>
<CAPTION>

International Business Units where Southern Energy has management control:

                     Phase                            % Completed         Status          Projected Completion
------------------------------------------------- -------------------- -------------- ------------------------------
<S>                                                       <C>          <C>            <C>
Awareness and planning, inventory and
 assessment                                               100          Complete       February 22, 1999
Testing, remediation, and validation                      54           In progress    July 31, 1999
Contingency planning                                      19           In progress    July 31, 1999
------------------------------------------------- -------------------- -------------- ------------------------------
</TABLE>
<TABLE>
<CAPTION>

Other International Business Units:

                     Phase                            % Completed         Status          Projected Completion
------------------------------------------------- -------------------- -------------- ------------------------------
<S>                                                       <C>          <C>            <C>
Awareness and planning, inventory and
 assessment                                               80           In progress    May 31, 1999
Testing, remediation, and validation                      20           In progress    September 30, 1999
Contingency planning                                      18           In progress    October 31, 1999
------------------------------------------------- -------------------- -------------- ------------------------------
</TABLE>

     In a number of the international business units, Southern Energy is neither
the majority owner nor the managing concern. In these circumstances, Southern
Energy is providing technical assistance but does not control the schedule or
progress.

Year 2000 Costs

For the traditional business, current projected total costs for Year 2000
readiness are approximately $91 million, which includes $6 million of cost
billed to non-affiliated companies. These costs include labor necessary to
identify, test, and renovate affected devices and systems. From its inception
through March 31, 1999, the Year 2000 program costs, recognized primarily as
expense, amounted to $70 million based on SOUTHERN's ownership interest. In
addition to the traditional business costs, current projections for Year 2000
program costs are approximately $20 million for the non-traditional business -
based on SOUTHERN's ownership interest of which $11 million has been spent
through March 31, 1999.

Year 2000 Risks

SOUTHERN is implementing a detailed process to minimize the possibility of
service interruptions related to the Year 2000. The company believes, based on
current tests, the system of the traditional business can provide customers with
electricity. These tests increase confidence, but do not guarantee error-free
operations. The company is taking what it believes to be prudent steps to
prepare for the Year 2000, and it expects any interruptions in service that may
occur within the traditional business service territory to be isolated and short
in duration.


                                       16

<PAGE>


                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



     SOUTHERN expects the risks associated with Year 2000 to be no more severe
than the scenarios that its electric system is routinely prepared to handle. The
most likely worst case scenario consists of the service loss of one of the
largest generating units and/or the service loss of any single bulk transmission
element in its traditional business service territory. There is a smaller risk
of sporadic and temporary fluctuations of power levels that would be aggravated
in the event of rapid and unscheduled changes to load patterns that resulted
from the activity of third parties. SOUTHERN has followed a proven methodology
for identifying and assessing software and devices containing potential Year
2000 challenges. Remediation and testing of those devices are in progress.
SOUTHERN has prepared contingency plans as appropriate and is participating in
North American Electric Reliability Council-coordinated national drills during
1999.

     SOUTHERN is currently reviewing the Year 2000 readiness of material third
parties that provide goods and services crucial to SOUTHERN's operations. Among
such critical third parties are fuel, transportation, telecommunications, water,
chemical, and other suppliers. There is some risk associated with
representations by third parties regarding their readiness and completion of
their own Year 2000 related work. Contingency plans based on the assessment of
each third party's ability to continue supplying critical goods and services to
SOUTHERN have been developed and are being reviewed.

     There is a potential for some earnings erosion caused by reduced electrical
demand by customers because of their own Year 2000 challenges. The risk
associated with the progress of some operations outside the United States is a
function of the local regulatory environment and the priorities of the entities
with management control. Year 2000 challenges are included in the list of due
diligence activities associated with acquisitions; there is some risk associated
with the subsequent validation of any given seller's representations.

Contingency Plans

Because of experience with hurricanes and other storms, the traditional business
is skilled at developing and using contingency plans in unusual circumstances.
As part of Year 2000 business continuity and contingency planning, SOUTHERN is
drawing on that experience to make risk assessments and is developing additional
plans to deal specifically with situations that could arise relative to Year
2000 challenges. SOUTHERN is identifying critical operational locations, and
scheduling key employees to be on duty at those locations during the Year 2000
transition. SOUTHERN is participating in two North American Electric Reliability
Council-coordinated national drills during 1999, and is conducting additional
tests to validate its contingency plans. Because of the level of detail of the
contingency planning process, management feels that the contingency plans will
keep any service interruptions that may occur within the traditional business
service territory isolated and short in duration.

     Contingency planning efforts for the non-traditional business are generally
in the initial phase.

     The material in this section constitutes forward-looking statements made
pursuant to the Private Securities Litigation Reform Act of 1995. There can be
no assurance that the actual results of SOUTHERN, its suppliers, or other third
party dependencies will not materially differ from expectations.


                                       17

<PAGE>


                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



FINANCIAL CONDITION

Overview

Major changes in SOUTHERN's financial condition during the first three months of
1999 included $505 million used for gross property additions to utility plant.
The funds for these additions and other capital requirements were from
operations and sales of securities. See SOUTHERN's Condensed Statements of Cash
Flows for further details.

     Reference is made to the Condensed Consolidated Statements of Comprehensive
Income enclosed herein for information relating to other comprehensive income
for the quarter ended March 31, 1999. In the quarter, Southern Energy recognized
$107 million of after-tax foreign exchange translation losses in other
comprehensive income which were principally related to normal shifts in exchange
rates between the U.S. dollar and the pound sterling and the Deutschemark, and
to the 50% devaluation of the Brazilian Real.

Financing Activities

During the first three months of 1999, retirements and redemptions of the
operating companies' first mortgage bonds and preferred stock totaled $504
million and $86 million, respectively. In February 1999, Alabama Power Capital
Trust III (the "Trust"), a statutory business trust established for the purpose
of holding ALABAMA's junior subordinated notes and issuing trust preferred
securities and common securities, sold $50 million of its capital auction
preferred securities which are guaranteed by ALABAMA. Also, in February 1999,
Georgia Power Capital Trust IV, a statutory business trust established for the
purpose of holding GEORGIA's junior subordinated notes and issuing trust
preferred securities and common securities, sold $200 million of its 6.85% trust
preferred securities, which are guaranteed by GEORGIA. Additionally, in March
1999, GEORGIA issued $100 million of 6 5/8% senior notes due March 31, 2039. The
proceeds from this issuance were used to repay a portion of GEORGIA's
outstanding short-term indebtedness.

     During the first three months of 1999, SOUTHERN raised $24 million from the
issuance of 883 thousand shares of common stock under SOUTHERN's various stock
plans. See Note (P) in the "Notes to the Condensed Financial Statements" herein
for discussion of programs to repurchase SOUTHERN's common stock. The market
price of SOUTHERN's common stock at March 31, 1999 was $23.3125 per share and
the book value was $13.89 per share, representing a market-to-book ratio of
168%, compared to $29.0625, $14.04 and 207%, respectively, at the end of 1998.
The dividend for the first quarter of 1999 was $0.335 per share.

Capital Requirements

Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Capital
Requirements for Construction", "Other Capital Requirements" and "Environmental
Matters" of SOUTHERN in the Form 10-K for a description of the Southern electric
system's capital requirements for its construction program, sinking fund
requirements and maturing debt, and environmental compliance efforts.
Approximately $1.1 billion will be required by March 31, 2000, for present
sinking fund requirements, redemption of preferred

                                       18
<PAGE>


                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



stock and redemptions and maturities of long-term debt. Also, the operating
companies plan to continue, to the extent possible, a program to retire
higher-cost debt and preferred stock and replace these securities with
lower-cost capital.

Sources of Capital

In addition to the financing activities previously described, SOUTHERN may
require additional equity capital during the remainder of the year. The amounts
and timing of additional equity capital to be raised in 1999, as well as in
subsequent years, will be contingent on SOUTHERN's investment opportunities. The
operating companies plan to obtain the funds required for construction and other
purposes from sources similar to those used in the past. The amount, type and
timing of any financings--if needed--will depend upon maintenance of adequate
earnings, regulatory approval, prevailing market conditions and other factors.
See Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional
information.

     To meet short-term cash needs and contingencies, the SOUTHERN system had at
March 31, 1999, approximately $554 million of cash and cash equivalents and
approximately $4.6 billion of unused credit arrangements with banks (including
$1,368 million of such arrangements under which borrowings may be made only to
fund purchase obligations of the operating companies relating to variable rate
pollution control bonds). At March 31, 1999, the system companies had
outstanding approximately $950 million of short-term notes payable and $1,413
million of commercial paper. Management believes that the need for working
capital can be adequately met by utilizing lines of credit without maintaining
large cash balances.

     See Note (D) in the "Notes to the Condensed Financial Statements" herein
for discussion of financial derivative contracts entered into by SOUTHERN.


                                       19

<PAGE>



                              ALABAMA POWER COMPANY


                                       20

<PAGE>
<TABLE>
<CAPTION>

                              ALABAMA POWER COMPANY
                   CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                        (Stated in Thousands of Dollars)

                                                                                     For the Three Months
                                                                                       Ended March 31,
                                                                                  ---------------------------
                                                                                     1999           1998
                                                                                  ------------  -------------

OPERATING REVENUES:
<S>                                                                                  <C>            <C>     
Revenues                                                                             $667,223       $674,295
Revenues from affiliates                                                               47,101         42,210
                                                                                  ------------  -------------
Total operating revenues                                                              714,324        716,505
                                                                                  ------------  -------------

OPERATING EXPENSES:
Operation--
  Fuel                                                                                188,014        193,022
  Purchased power from non-affiliates                                                   7,580         17,535
  Purchased power from affiliates                                                      27,427         18,632
  Other                                                                               117,896        114,813
Maintenance                                                                            70,774         63,533
Depreciation and amortization                                                          87,182         86,239
Taxes other than income taxes                                                          53,061         49,439
Federal and state income taxes                                                         38,700         42,557
                                                                                  ------------  -------------
Total operating expenses                                                              590,634        585,770
                                                                                  ------------  -------------
OPERATING INCOME                                                                      123,690        130,735
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction                                     1,988            285
Equity in earnings of subsidiaries                                                        768          1,523
Interest income                                                                         9,446         13,670
Other, net                                                                             (7,491)        (8,917)
Income taxes applicable to other income                                                   924          2,177
                                                                                  ------------  -------------
INCOME BEFORE INTEREST CHARGES AND OTHER                                              129,325        139,473
                                                                                  ------------  -------------
INTEREST CHARGES AND OTHER:
Interest on long-term debt                                                             45,060         44,718
Allowance for debt funds used during construction                                      (1,741)          (652)
Interest on interim obligations                                                         2,675          4,406
Amortization of debt discount, premium and expense, net                                 2,718          2,424
Other interest charges                                                                  7,832         13,620
Distributions on preferred securities of subsidiary companies                           5,831          5,588
                                                                                  ------------  -------------
Interest charges and other, net                                                        62,375         70,104
                                                                                  ------------  -------------
NET INCOME                                                                             66,950         69,369
DIVIDENDS ON PREFERRED STOCK                                                            3,875          3,328
                                                                                  ------------  -------------
NET INCOME AFTER DIVIDENDS ON
 PREFERRED STOCK                                                                      $63,075        $66,041
                                                                                  ============  =============



                 The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>

                                                                  21
         

<PAGE>
<TABLE>
<CAPTION>


                              ALABAMA POWER COMPANY
                 CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                        (Stated in Thousands of Dollars)

                                                                                                   For the Three Months
                                                                                                     Ended March 31,
                                                                                              -------------------------------
                                                                                                  1999              1998
                                                                                              -------------     -------------

OPERATING ACTIVITIES:
<S>                                                                                               <C>               <C>     
Net income                                                                                        $ 66,950          $ 69,369
Adjustments to reconcile net income to net cash provided by operating activities--
     Depreciation and amortization                                                                 102,538           102,837
     Deferred income taxes and investment tax credits, net                                           2,526           (11,359)
     Allowance for equity funds used during construction                                            (1,988)             (285)
     Other, net                                                                                     19,628            14,056
     Changes in certain current assets and liabilities--
       Receivables, net                                                                             73,983            82,947
       Inventories                                                                                 (17,556)          (18,734)
       Prepayments                                                                                 (43,815)          (37,195)
       Payables                                                                                   (101,665)          (74,852)
       Taxes accrued                                                                                51,836            64,796
       Energy cost recovery, retail                                                                 22,450            24,254
       Other                                                                                       (40,398)          (45,635)
                                                                                              -------------     -------------
Net cash provided from operating activities                                                        134,489           170,199
                                                                                              -------------     -------------
INVESTING ACTIVITIES:
Gross property additions                                                                          (142,065)         (132,763)
Other                                                                                              (21,592)          (18,781)
                                                                                              -------------     -------------
Net cash used for investing activities                                                            (163,657)         (151,544)
                                                                                              -------------     -------------
FINANCING ACTIVITIES:
Proceeds--
   Company obligated mandatorily redeemable preferred securities                                    50,000                 -
   Other long-term debt                                                                                  -           200,000
Retirements--
   Preferred stock                                                                                 (50,000)                -
   First mortgage bonds                                                                           (300,000)          (74,345)
   Other long-term debt                                                                               (246)             (238)
Interim obligations, net                                                                           322,653           (47,867)
Payment of preferred stock dividends                                                                (4,487)           (3,350)
Payment of common stock dividends                                                                  (98,000)          (90,400)
Miscellaneous                                                                                       (3,096)           (7,706)
                                                                                              -------------     -------------
Net cash used for financing activities                                                             (83,176)          (23,906)
                                                                                              -------------     -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                           (112,344)           (5,251)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                   134,248            23,957
                                                                                              =============     =============
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                        $ 21,904          $ 18,706
                                                                                              =============     =============

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
  Interest (net of amount capitalized)                                                             $60,563           $65,401
  Income taxes                                                                                    ($14,000)           $2,990




            The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>

                                       22

                                      
<PAGE>
<TABLE>
<CAPTION>

                                                  ALABAMA POWER COMPANY
                                                 CONDENSED BALANCE SHEETS
                                             (Stated in Thousands of Dollars)

                                                          ASSETS

                                                                                           At March 31,
                                                                                            1999            At December 31,
                                                                                         (Unaudited)            1998
                                                                                       ---------------     ----------------
UTILITY PLANT:
<S>                                                                                       <C>                  <C>        
Plant in service, at original cost                                                        $11,444,205          $11,352,838
Less accumulated provision for depreciation                                                 4,755,275            4,666,513
                                                                                       ---------------     ----------------
                                                                                            6,688,930            6,686,325
Nuclear fuel, at amortized cost                                                                88,963               95,575
Construction work in progress                                                                 558,006              525,359
                                                                                       ---------------     ----------------
Total                                                                                       7,335,899            7,307,259
                                                                                       ---------------     ----------------

OTHER PROPERTY AND INVESTMENTS:
Equity investments in subsidiaries                                                             33,813               34,298
Nuclear decommissioning trusts, at market                                                     245,184              232,183
Miscellaneous                                                                                  12,210               12,915
                                                                                       ---------------     ----------------
Total                                                                                         291,207              279,396
                                                                                       ---------------     ----------------

CURRENT ASSETS:
Cash and cash equivalents                                                                      21,904              134,248
Receivables --
    Customer accounts receivable                                                              270,667              343,630
    Other accounts and notes receivable                                                        23,849               32,394
    Affiliated companies                                                                       37,735               39,981
    Accumulated provision for uncollectible accounts                                             (534)              (1,855)
Refundable income taxes                                                                        38,117               52,117
Fossil fuel stock, at average cost                                                            100,469               83,238
Materials and supplies, at average cost                                                       149,994              149,669
Prepayments                                                                                    60,975               17,160
Vacation pay deferred                                                                          28,390               28,390
                                                                                       ---------------     ----------------
Total                                                                                         731,566              878,972
                                                                                       ---------------     ----------------


DEFERRED CHARGES AND OTHER ASSETS:
Deferred charges related to income taxes                                                      358,685              362,953
Debt expense, being amortized                                                                   8,374                8,602
Premium on reacquired debt, being amortized                                                    86,010               83,440
Prepaid pension costs                                                                         180,561              169,393
Department of Energy assessments                                                               31,088               31,088
Miscellaneous                                                                                 105,496              104,595
                                                                                       ---------------     ----------------
Total                                                                                         770,214              760,071
                                                                                       ---------------     ----------------

TOTAL ASSETS                                                                               $9,128,886           $9,225,698
                                                                                       ===============     ================





           The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>

                                                            23


                                  
<PAGE>

<TABLE>
<CAPTION>
                                                  ALABAMA POWER COMPANY
                                                 CONDENSED BALANCE SHEETS
                                             (Stated in Thousands of Dollars)

                                              CAPITALIZATION AND LIABILITIES

                                                                                           At March 31,
                                                                                            1999            At December 31,
                                                                                         (Unaudited)            1998
                                                                                       ---------------     ----------------
CAPITALIZATION:
<S>                                                                                         <C>                  <C>
Common stock equity --
Common stock (par value $40 per share) --
 authorized 6,000,000 shares; outstanding 5,608,955 shares                                  $ 224,358            $ 224,358
Paid-in capital                                                                             1,334,645            1,334,645
Premium on preferred stock                                                                         99                   99
Retained earnings                                                                           1,190,016            1,224,965
                                                                                       ---------------     ----------------
                                                                                            2,749,118            2,784,067
Preferred stock                                                                               317,512              317,512
Company obligated mandatorily redeemable preferred securities of
  subsidiary trusts holding Company Junior Subordinated Notes                                 347,000              297,000
Long-term debt                                                                              2,548,317            2,646,566
                                                                                       ---------------     ----------------
Total                                                                                       5,961,947            6,045,145
                                                                                       ---------------     ----------------

CURRENT LIABILITIES:
Preferred stock due within one year                                                                 -               50,000
Long-term debt due within one year                                                            271,180              471,209
Commercial paper                                                                              322,653                    -
Accounts payable --
   Affiliated companies                                                                        62,739               79,844
   Other                                                                                       98,723              188,074
Customer deposits                                                                              29,385               29,235
Taxes accrued--
   Federal and state income                                                                    97,414               82,219
   Other                                                                                       34,144               17,559
Interest accrued                                                                               29,572               38,166
Vacation pay accrued                                                                           28,390               28,390
Miscellaneous                                                                                  46,553               79,095
                                                                                       ---------------     ----------------
Total                                                                                       1,020,753            1,063,791
                                                                                       ---------------     ----------------

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes                                                           1,226,707            1,202,971
Accumulated deferred investment tax credits                                                   268,603              271,611
Prepaid capacity revenues, net                                                                 92,288               96,080
Department of Energy assessments                                                               27,202               27,202
Deferred credits related to income taxes                                                      310,311              315,735
Natural disaster reserve                                                                       20,052               19,385
Miscellaneous                                                                                 201,023              183,778
                                                                                       ---------------     ----------------
Total                                                                                       2,146,186            2,116,762
                                                                                       ---------------     ----------------

TOTAL CAPITALIZATION AND LIABILITIES                                                       $9,128,886           $9,225,698
                                                                                       ===============     ================



           The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
</TABLE>

                                        24



<PAGE>


                              ALABAMA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

                    FIRST QUARTER 1999 vs. FIRST QUARTER 1998


RESULTS OF OPERATIONS

Earnings

ALABAMA's net income after dividends on preferred stock for the first quarter of
1999 was $63.1 million compared to $66.0 million for the corresponding period of
1998. Earnings for this quarter decreased $2.9 million or 4.5% when compared to
the same period in 1998 due primarily to an increase in operating expenses.

     Significant income statement items appropriate for discussion include the
following:

                                                        First Quarter
                                            -----------------------------------
                                               (in thousands)         %
Revenues....................................     $(7,072)            (1.0)
Revenues from affiliates....................       4,891             11.6
Purchased power from non-affiliates ........      (9,955)           (56.8)
Purchased power from affiliates.............       8,795             47.2
Maintenance expense.........................       7,241             11.4
Interest income.............................      (4,224)           (30.9)
Other interest charges......................      (5,788)           (42.5)


     Revenues. Revenues for the first quarter of 1999 were down from the same
period in 1998 due primarily to a 12.7% decrease in non-territorial energy sales
resulting in a $12.9 million decrease in non-territorial revenues which was
partially offset by a 2.3% increase in territorial energy sales or $8.9 million
increase in territorial revenues. Non-territorial energy sales were down due to
a decrease in unit power sales and a decrease in sales for resale outside
ALABAMA's service area. Territorial revenues increased primarily due to a 1.7%
increase in retail energy sales. Retail revenues, excluding those revenues which
represent the recovery of fuel expense and certain other expenses and do not
affect income, increased $1 million for the current quarter.

                                       25
<PAGE>


                              ALABAMA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



     Revenues from affiliates and Purchased power from affiliates. Revenues from
sales to affiliated companies within the Southern electric system, as well as
purchases of energy, will vary from period to period depending on demand, the
availability, and cost of generating resources at each company. These
transactions did not have a significant impact on earnings.

     Purchased power from non-affiliates. These expenses dropped in the current
quarter of 1999 when compared to the same period of 1998 due primarily to
increased purchases in 1998 related to power marketing activities, a majority of
which were resold to non-affiliated third parties. These transactions had no
significant effect on net income.

     Maintenance expense. These costs increased for the first quarter primarily
due to maintenance on steam and nuclear plants and transmission and distribution
lines.

     Interest income. This item was lower for the first quarter of 1999 when
compared to the first quarter in 1998 due to a decrease in recognized gains on
investments held by the nuclear decommissioning trust. The decrease in interest
income related to the nuclear decommissioning trust was offset by a concurrent
recognition of other interest charges in accordance with FERC requirements.

     Other interest charges. The change in these charges for the current quarter
when compared to the same period in 1998 is attributed to a decrease in interest
charges related to the nuclear decommissioning trust. The decrease was offset by
a concurrent recognition of interest income in accordance with FERC
requirements.


Future Earnings Potential

The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from energy sales growth to a less regulated, more competitive
environment.

     With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 1 - BUSINESS - "Competition" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of ALABAMA in
the Form 10-K.

     Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be offset. For additional information about the Clean Air Act and
other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of ALABAMA in the Form 10-K.


                                       26

<PAGE>


                              ALABAMA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



     ALABAMA's plans to achieve Year 2000 readiness have been implemented and
are included in the SOUTHERN system's Year 2000 Program. The costs related to
ALABAMA's Year 2000 program, including ALABAMA's share of costs of Southern
Nuclear Operating Company, are expected to be $29.6 million. From its inception
through March 31, 1999, the Year 2000 program costs, recognized primarily as
expense, amounted to $17.5 million. For additional information, see SOUTHERN's
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION - "Future Earnings Potential" herein.

     The FASB has issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which must be adopted by the year 2000. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. ALABAMA has not yet quantified the impact
of adopting this statement on its financial statements; however, the adoption
could increase volatility in earnings.

     Reference is made to Notes (B), (C), (F) through (J) in the "Notes to the
Condensed Financial Statements" herein for discussion of various contingencies
and other matters which may affect future earnings potential.


FINANCIAL CONDITION

Overview

Major changes in ALABAMA's financial condition during the first three months of
1999 included the addition of approximately $142.1 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operating activities. See ALABAMA's Condensed Statements of Cash Flows for
further details.

Financing Activities

During the first three months of 1999, redemptions of first mortgage bonds and
preferred stock by ALABAMA totaled $300 million and $50 million, respectively.
In February 1999, Alabama Power Capital Trust III (the "Trust"), a statutory
business trust established for the purpose of holding ALABAMA's junior
subordinated notes and issuing trust preferred securities and common securities,
sold $50 million of its capital auction preferred securities which are
guaranteed by ALABAMA. The Trust will invest the proceeds in Series C junior
subordinated notes. The net proceeds received by ALABAMA will be used to repay a
portion of ALABAMA's outstanding short-term indebtedness. See Note (G) in the "
Notes to the Condensed Financial Statements" herein for additional information.

     ALABAMA will continue to retire higher-cost debt and preferred stock and
replace these securities with lower-cost capital as market conditions permit.



                                       27
<PAGE>


                              ALABAMA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION




Capital Requirements

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of
ALABAMA under "Capital Requirements," "Other Capital Requirements" and
"Environmental Matters" in the Form 10-K for a description of ALABAMA's capital
requirements for its construction program, maturing debt and environmental
compliance efforts.

Sources of Capital

In addition to the financing activities previously described herein, ALABAMA
plans to obtain the funds required for construction and other purposes from
sources similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. See Item 1
- BUSINESS "Financing Programs" in the Form 10-K for additional information.

     To meet short-term cash needs and contingencies, ALABAMA had at March 31,
1999, approximately $21.9 million of cash and cash equivalents and had unused
committed lines of credit of approximately $786 million (including $315 million
of such lines under which borrowings may be made only to fund purchase
obligations relating to variable rate pollution control bonds) with regulatory
authority for up to $750 million of short-term borrowings. Reference is made to
"Financing Activities" above for information related to the planned redemptions
of certain First Mortgage Bonds. At March 31, 1999, ALABAMA had outstanding
$322.7 million of commercial paper.

                                       28
<PAGE>

                              ARTHUR ANDERSEN LLP



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




TO ALABAMA POWER COMPANY:

     We have reviewed the accompanying condensed balance sheet of ALABAMA POWER
COMPANY as of March 31, 1999, and the related condensed statements of income for
the three-month periods ended March 31, 1999 and 1998 and cash flows for the
three-month periods ended March 31, 1999 and 1998. These financial statements
are the responsibility of the Company's management.

     We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

     Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.

     We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of ALABAMA POWER COMPANY as of December 31, 1998
(not presented herein) and, in our report dated February 10, 1999, we expressed
an unqualified opinion on that statement. In our opinion, the information set
forth in the accompanying condensed balance sheet as of December 31, 1998 is
fairly stated, in all material respects, in relation to the balance sheet from
which it has been derived.



/s/  Arthur Andersen LLP
Birmingham, Alabama
May 10, 1999

                                       29
<PAGE>

                              GEORGIA POWER COMPANY



                                       30
<PAGE>
<TABLE>
<CAPTION>



                                                       GEORGIA POWER COMPANY
                                             CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                                                  (Stated in Thousands of Dollars)

                                                                                              For the Three Months
                                                                                                Ended March 31,
                                                                                           ---------------------------
                                                                                               1999           1998
                                                                                           ------------   ------------

OPERATING REVENUES:
<S>                                                                                           <C>            <C>     
Revenues                                                                                      $923,024       $979,334
Revenues from affiliates                                                                         7,906          4,809
                                                                                           ------------   ------------
Total operating revenues                                                                       930,930        984,143
                                                                                           ------------   ------------

OPERATING EXPENSES:
Operation--
  Fuel                                                                                         178,212        176,631
  Purchased power from non-affiliates                                                           32,158         45,474
  Purchased power from affiliates                                                               54,921         43,685
  Other                                                                                        168,282        169,425
Maintenance                                                                                     91,536         80,949
Depreciation and amortization                                                                  132,435        158,594
Taxes other than income taxes                                                                   49,002         52,195
Federal and state income taxes                                                                  63,380         80,649
                                                                                           ------------   ------------
Total operating expenses                                                                       769,926        807,602
                                                                                           ------------   ------------
OPERATING INCOME                                                                               161,004        176,541
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction                                                  -            178
Equity in earnings of unconsolidated subsidiary                                                    733          1,082
Interest income                                                                                    250            553
Other, net                                                                                      (6,637)        (5,123)
Income taxes applicable to other income                                                          2,559          2,543
                                                                                           ------------   ------------
INCOME BEFORE INTEREST CHARGES                                                                 157,909        175,774
                                                                                           ------------   ------------
INTEREST CHARGES AND OTHER:
Interest on long-term debt                                                                      41,111         45,056
Allowance for debt funds used during construction                                               (2,182)        (1,828)
Interest on interim obligations                                                                  4,216          3,746
Amortization of debt discount, premium and expense, net                                          3,700          3,331
Other interest charges                                                                           3,311          4,014
Distributions on preferred securities of subsidiary companies                                   14,971         13,524
                                                                                           ------------   ------------
Interest charges and other, net                                                                 65,127         67,843
                                                                                           ------------   ------------
NET INCOME                                                                                      92,782        107,931
DIVIDENDS ON PREFERRED STOCK                                                                     1,201          2,027
                                                                                           ------------   ------------
NET INCOME AFTER DIVIDENDS ON
PREFERRED STOCK                                                                                $91,581       $105,904
                                                                                           ============   ============









                The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>

                                                                 31


                                      
<PAGE>

<TABLE>
<CAPTION>
                                                   GEORGIA POWER COMPANY
                                       CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                              (Stated in Thousands of Dollars)

                                                                                                   For the Three Months
                                                                                                     Ended March 31,
                                                                                              -------------------------------
                                                                                                  1999              1998
                                                                                              -------------     -------------

OPERATING ACTIVITIES:
<S>                                                                                               <C>              <C>      
Net income                                                                                        $ 92,782         $ 107,931
Adjustments to reconcile net income to net cash provided by operating activities--
     Depreciation and amortization                                                                 149,086           185,484
     Deferred income taxes and investment tax credits, net                                          (1,894)           (7,602)
     Other, net                                                                                      7,003            (1,904)
     Changes in certain current assets and liabilities--
       Receivables, net                                                                             86,184            49,944
       Inventories                                                                                 (37,748)          (31,165)
       Payables                                                                                    (90,358)          (64,623)
       Taxes accrued                                                                               (30,086)           17,940
       Energy cost recovery, retail                                                                 10,997            14,016
       Other                                                                                         1,600           (15,862)
                                                                                              -------------     -------------
Net cash provided from operating activities                                                        187,566           254,159
                                                                                              -------------     -------------
INVESTING ACTIVITIES:
Gross property additions                                                                          (163,030)          (80,276)
Other                                                                                              (26,920)          (42,479)
                                                                                              -------------     -------------
Net cash used for investing activities                                                            (189,950)         (122,755)
                                                                                              -------------     -------------
FINANCING ACTIVITIES:
Proceeds--
   Preferred securities                                                                            200,000                 -
   Pollution control bonds                                                                               -            89,990
   Senior notes                                                                                    100,000           145,000
Retirements--
   Preferred stock                                                                                 (35,679)                -
   First mortgage bonds                                                                           (204,000)         (120,460)
Special deposits - redemption funds                                                                      -           (89,990)
Interim obligations, net                                                                            97,308           (79,929)
Payment of preferred stock dividends                                                                    38            (4,354)
Payment of common stock dividends                                                                 (133,100)         (132,100)
Miscellaneous                                                                                      (20,576)           (4,507)
                                                                                              -------------     -------------
Net cash provided from (used for) financing activities                                               3,991          (196,350)
                                                                                              -------------     -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                              1,607           (64,946)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                    16,272            83,333
                                                                                              =============     =============
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                        $ 17,879          $ 18,387
                                                                                              =============     =============

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
  Interest (net of amount capitalized)                                                             $65,971           $76,069
  Income taxes (net of refunds)                                                                    $18,929           $10,384





            The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>

                                                             32

                                    
<PAGE>
<TABLE>
<CAPTION>

                                                  GEORGIA POWER COMPANY
                                                 CONDENSED BALANCE SHEETS
                                             (Stated in Thousands of Dollars)

                                                          ASSETS

                                                                                           At March 31,
                                                                                            1999             At December 31,
                                                                                         (Unaudited)            1998
                                                                                       ---------------     ----------------
UTILITY PLANT:
<S>                                                                                       <C>                  <C>        
Plant in service                                                                          $15,511,121          $15,441,146
Less accumulated provision for depreciation                                                 6,224,037            6,109,331
                                                                                       ---------------     ----------------
                                                                                            9,287,084            9,331,815
Nuclear fuel, at amortized cost                                                               115,390              121,169
Construction work in progress                                                                 247,377              189,849
                                                                                       ---------------     ----------------
Total                                                                                       9,649,851            9,642,833
                                                                                       ---------------     ----------------

OTHER PROPERTY AND INVESTMENTS:
Southern Electric Generating Company, at equity                                                23,840               24,360
Nuclear decommissioning trusts, at market                                                     328,430              284,536
Miscellaneous                                                                                  34,322               34,781
                                                                                       ---------------     ----------------
Total                                                                                         386,592              343,677
                                                                                       ---------------     ----------------

CURRENT ASSETS:
Cash and cash equivalents                                                                      17,879               16,272
Receivables --
   Customer accounts receivable                                                               363,914              439,420
   Other accounts and notes receivable                                                         70,366               99,574
   Affiliated companies                                                                        21,151               16,817
   Accumulated provision for uncollectible accounts                                            (5,500)              (5,500)
Fossil fuel stock, at average cost                                                            141,268              104,133
Materials and supplies, at average cost                                                       244,090              243,477
Prepayments                                                                                    31,714               29,670
Vacation pay deferred                                                                          42,566               43,610
                                                                                       ---------------     ----------------
Total                                                                                         927,448              987,473
                                                                                       ---------------     ----------------


DEFERRED CHARGES:
Deferred charges related to income taxes                                                      600,321              604,488
Premium on reacquired debt, being amortized                                                   182,697              173,858
Prepaid pension costs                                                                         114,269              103,606
Debt expense, being amortized                                                                  59,984               51,261
Miscellaneous                                                                                 136,480              126,422
                                                                                       ---------------     ----------------
Total                                                                                       1,093,751            1,059,635
                                                                                       ---------------     ----------------

TOTAL ASSETS                                                                              $12,057,642          $12,033,618
                                                                                       ===============     ================



           The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>

                                                            33


                                   
<PAGE>

<TABLE>
<CAPTION>
                                                  GEORGIA POWER COMPANY
                                                 CONDENSED BALANCE SHEETS
                                             (Stated in Thousands of Dollars)

                                              CAPITALIZATION AND LIABILITIES

                                                                                           At March 31,
                                                                                            1999             At December 31,
                                                                                         (Unaudited)            1998
                                                                                       ---------------     ----------------
CAPITALIZATION:
<S>                                                                                         <C>                  <C>      
Common stock equity --
Common stock (without par value) --
  authorized 15,000,000 shares; outstanding 7,761,500 shares                                $ 344,250            $ 344,250
Paid-in capital                                                                             1,660,215            1,660,206
Premium on preferred stock                                                                         40                  158
Retained earnings                                                                           1,738,039            1,779,558
                                                                                       ---------------     ----------------
                                                                                            3,742,544            3,784,172
Preferred stock                                                                                15,504               15,527
Company obligated mandatorily redeemable preferred securities
  of subsidiaries substantially all of whose assets are junior
  subordinated debentures or notes                                                            889,250              689,250
Long-term debt                                                                              2,746,025            2,744,362
                                                                                       ---------------     ----------------
Total                                                                                       7,393,323            7,233,311
                                                                                       ---------------     ----------------

CURRENT LIABILITIES:
Preferred stock due within one year                                                                 -               35,656
Long-term debt due within one year                                                            295,510              399,429
Notes payable to banks                                                                        231,813              117,634
Commercial paper                                                                              206,347              223,218
Accounts payable --
  Affiliated companies                                                                         48,426               75,774
  Other                                                                                       273,138              326,317
Customer deposits                                                                              70,033               69,584
Taxes accrued--
  Federal and state income                                                                     59,586               15,801
  Other                                                                                         48,488              122,359
Interest accrued                                                                               55,644               60,187
Miscellaneous                                                                                 106,117              100,793
                                                                                       ---------------     ----------------
Total                                                                                       1,395,102            1,546,752
                                                                                       ---------------     ----------------

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes                                                           2,246,714            2,249,613
Accumulated deferred investment tax credits                                                   378,214              381,914
Deferred credits related to income taxes                                                      279,111              284,017
Employee benefits provisions                                                                  181,802              177,148
Miscellaneous                                                                                 183,376              160,863
                                                                                       ---------------     ----------------
Total                                                                                       3,269,217            3,253,555
                                                                                       ---------------     ----------------

TOTAL CAPITALIZATION AND LIABILITIES                                                      $12,057,642          $12,033,618
                                                                                       ===============     ================




           The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
</TABLE>

                                        34

<PAGE>



                              GEORGIA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

                    FIRST QUARTER 1999 vs. FIRST QUARTER 1998


RESULTS OF OPERATIONS

Earnings

GEORGIA's net income after dividends on preferred stock for the first quarter of
1999 was $91.6 million compared to $105.9 million for the corresponding period
in 1998. Earnings decreased by $14.3 million or 13.5% for this first quarter due
primarily to the timing of earnings under a new retail rate order effective
January 1999. Under the new order, fixed rate reductions and accelerated
amortization are being recognized ratably throughout 1999. During 1998, variable
accelerated depreciation recorded under the previous accounting order was
primarily recognized during the higher revenue summer months. See Note (K) in
the "Notes to the Condensed Financial Statements" herein for further details
regarding the retail rate order.

     Significant income statement items appropriate for discussion include the
following:

                                                    Increase (Decrease)
                                             ----------------------------------
                                              (in thousands)        %
Revenues.....................................   $(56,310)          (5.7)
Revenues from affiliates.....................      3,097           64.4
Purchased power from non-affiliates .........    (13,316)         (29.3)
Purchased power from affiliates..............     11,236           25.7
Maintenance expense..........................     10,587           13.1
Depreciation and amortization expense........    (26,159)         (16.5)
Distributions on preferred securities of
   subsidiary companies......................      1,447           10.7
Dividends on preferred stock.................       (826)         (40.7)


     Revenues. Revenues within the service area decreased by $40.9 million for
the first quarter when compared to the corresponding period in 1998. Retail
revenues, excluding fuel revenues which generally do not affect income,
decreased $47.4 million for the first quarter of 1999 when compared to the same
period in 1998 as a direct result of retail rate reductions ordered by the
Georgia PSC. Energy sales within the service area rose slightly due primarily to
a 1.7% increase in retail energy sales.

     Wholesale revenues within the service area decreased $9.8 million during
the first quarter primarily as a result of a scheduled reduction in capacity
revenues under a power supply agreement with OPC and a decrease in energy sales.
Wholesale revenues outside the service area decreased by $13.9 million for the
first quarter of 1999 when compared to the same period in 1998 primarily due to
a decrease in energy sales.

                                       35

<PAGE>


                              GEORGIA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



     Revenues from affiliates and Purchased power from affiliates. Revenues from
sales to operating affiliates within SOUTHERN, as well as purchases of energy,
will vary from period to period depending on demand and the availability and
cost of generating resources at each company. These transactions do not have a
significant impact on earnings.

     Purchased power from non-affiliates. The decrease for this first quarter of
1999 when compared to the same period in 1998 was mainly due to higher demand in
1998 for energy and higher energy purchases in 1998 related to power marketing
activities, a majority of which were resold to non-affiliated third parties.
These transactions had no significant effect on net income.

     Maintenance expense. These costs for the first quarter 1999 increased
primarily due to scheduled outages at generating facilities.

     Depreciation and amortization expense. The decrease in the first quarter as
compared to the same period in 1998 is primarily due to the decrease of
accelerated depreciation and amortization charges of $12.8 million pursuant to
the new retail rate order and the completion in 1998 of the amortization of
deferred Plant Vogtle costs. See Note (K) in the "Notes to the Condensed
Financial Statements" herein for details regarding the retail rate order.

     Distributions on preferred securities of subsidiary companies.
Distributions for the first quarter 1999 increased primarily due to the issuance
of additional mandatorily redeemable preferred securities in February 1999.

     Dividends on preferred stock. Dividends for the current quarter decreased
as a result of the redemption during 1998 of adjustable rate preferred stock.


Future Earnings Potential

The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors including regulatory matters and energy sales.

     With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 1 - BUSINESS - "Competition" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GEORGIA in
the Form 10-K.

     Effective January 1, 1999, GEORGIA began operating under a new three-year
retail rate order. Under the order, GEORGIA's earnings are evaluated against a
retail return on common equity range of 10% to 12.5%. In compliance with the
order, retail rates were decreased by $262 million on an annual basis effective
January 1, 1999. Reference is made to Note (K) in the "Notes to the Condensed
Financial Statements" herein and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of GEORGIA in the Form 10-K for additional
information.


                                       36

<PAGE>


                              GEORGIA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



     In September 1998, OPC decreased its purchases of capacity under a power
supply agreement by 250 megawatts, resulting in a $16 million reduction in 1999
revenues. Under the amended 1995 Integrated Resource Plan approved by the
Georgia PSC in March 1997, the resources associated with the decreased purchases
in 1998 will be used to meet the needs of GEORGIA's retail customers through
2004. As a result of additional reduction notices given by OPC under its
agreement with GEORGIA, GEORGIA's capacity revenues received from OPC were
estimated to decrease by an additional $7 million in 1999, $18 million in 2000
and $4 million in 2001. Effective April 1, 1999, GEORGIA and OPC entered into a
new agreement which will delay, in part, planned purchase reductions by OPC. The
new agreement has been filed with the FERC under SOUTHERN's market-based rate
authority. Based on the above, GEORGIA's capacity revenues received from OPC are
now estimated to decrease by approximately $6 million in 1999, $15 million in
2000 and $7 million in 2001.

     Compliance costs related to the Clean Air Act and other environmental
issues could affect earnings. For additional information, see Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Issues" of GEORGIA in the
Form 10-K.

     GEORGIA's plans to achieve Year 2000 compliance have been implemented and
are included in the SOUTHERN system's Year 2000 Program. The costs related to
GEORGIA's Year 2000 program, including GEORGIA's share of costs of Southern
Nuclear Operating Company, are expected to be approximately $38 million. From
its inception through March 31, 1999, the Year 2000 program costs, recognized as
expense, amounted to $32 million. For additional information, see SOUTHERN's
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION - "Future Earnings Potential" herein.

     Reference is made to Notes (B), (C), (F), (G), (K) through (M) in the
"Notes to the Condensed Financial Statements" herein for discussion of various
contingencies and other matters which may affect future earnings potential.

FINANCIAL CONDITION

Overview

The major change in GEORGIA's financial condition during the first three months
of 1999 was the addition of approximately $163 million to gross plant. The funds
for these additions and other capital requirements were derived primarily from
operations. See GEORGIA's Condensed Statements of Cash Flows for further
details.



                                       37

<PAGE>


                              GEORGIA POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION




Financing Activities

During the first three months of 1999, redemptions of first mortgage bonds and
preferred stock by GEORGIA totaled $204 million and $35.7 million, respectively.
In February 1999, Georgia Power Capital Trust IV, a statutory business trust
established for the purpose of holding GEORGIA's junior subordinated notes and
issuing trust preferred securities and common securities, sold $200 million of
its 6.85% trust preferred securities, which are guaranteed by GEORGIA. (See Note
(G) in the " Notes to the Condensed Financial Statements" herein and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Financing Activities" of GEORGIA in the
Form 10-K for further details.) In March 1999, GEORGIA issued $100 million of 6
5/8% senior notes due March 31, 2039. The proceeds from this issuance were used
to repay a portion of GEORGIA's outstanding short-term indebtedness.

     GEORGIA plans to continue, to the extent possible, a program to retire
higher-cost debt and preferred stock and replace these securities with
lower-cost capital.

Capital Requirements

Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GEORGIA
under "Liquidity and Capital Requirements" and "Environmental Issues" in the
Form 10-K for a description of GEORGIA's capital requirements for its
construction program and environmental compliance efforts.

Sources of Capital

In addition to the financing activities previously described herein, GEORGIA
plans to obtain the funds required for construction and other purposes from
sources similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. See Item 1
- BUSINESS "Financing Programs" in the
Form 10-K for additional information.

     To meet short-term cash needs and contingencies, GEORGIA had at March 31,
1999, approximately $17.9 million of cash and cash equivalents and approximately
$1.3 billion of unused credit arrangements with banks. Of the $1.3 billion, $980
million provides liquidity support to GEORGIA's variable rate pollution control
bonds. At March 31, 1999, GEORGIA had $231.8 million and $206.3 million
outstanding in short-term notes payable to banks and commercial paper,
respectively. Management believes that the need for working capital can be
adequately met by utilizing lines of credit without maintaining large cash
balances.


                                       38

<PAGE>



                              ARTHUR ANDERSEN LLP

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




TO GEORGIA POWER COMPANY:

     We have reviewed the accompanying condensed balance sheet of GEORGIA POWER
COMPANY (a Georgia corporation) as of March 31, 1999, and the related condensed
statements of income for the three-month periods ended March 31, 1999 and 1998
and cash flows for the three-month periods ended March 31, 1999 and 1998. These
financial statements are the responsibility of the Company's management.

     We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

     Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.

     We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of GEORGIA POWER COMPANY as of December 31, 1998
(not presented herein), and, in our report dated February 10, 1999, we expressed
an unqualified opinion on that statement. In our opinion, the information set
forth in the accompanying condensed balance sheet as of December 31, 1998, is
fairly stated, in all material respects, in relation to the balance sheet from
which it has been derived.



/s/  Arthur Andersen LLP
Atlanta, Georgia
May 10, 1999


                                       39

<PAGE>


                               GULF POWER COMPANY


                                       40
<PAGE>
<TABLE>
<CAPTION>


                                                          GULF POWER COMPANY
                                             CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                                                  (Stated in Thousands of Dollars)

                                                                                          For the Three Months
                                                                                            Ended March 31,
                                                                                       ------------   ------------
                                                                                          1999           1998
                                                                                       ------------   ------------

OPERATING REVENUES:
<S>                                                                                       <C>            <C>     
Revenues                                                                                  $127,435       $134,553
Revenues from affiliates                                                                     7,071          6,397
                                                                                        ------------   ------------
Total operating revenues                                                                   134,506        140,950
                                                                                       ------------   ------------

OPERATING EXPENSES:
Operation--
  Fuel                                                                                      38,753         41,443
  Purchased power from non-affiliates                                                        4,156          4,733
  Purchased power from affiliates                                                            3,575          3,888
  Other                                                                                     27,142         31,281
Maintenance                                                                                 16,593         12,896
Depreciation and amortization                                                               16,078         14,703
Taxes other than income taxes                                                               12,544         12,619
Federal and state income taxes                                                               2,641          4,150
                                                                                       ------------   ------------
Total operating expenses                                                                   121,482        125,713
                                                                                       ------------   ------------
OPERATING INCOME                                                                            13,024         15,237
OTHER INCOME (EXPENSE):
Interest income                                                                                241            123
Other, net                                                                                    (812)        (1,203)
Income taxes applicable to other income                                                        161            357
                                                                                       ------------   ------------
INCOME BEFORE INTEREST CHARGES                                                              12,614         14,514
                                                                                       ------------   ------------
INTEREST CHARGES AND OTHER:
Interest on long-term debt                                                                   4,950          4,877
Other interest charges                                                                         278            275
Interest on notes payable                                                                      485            338
Amortization of debt discount, premium and expense, net                                        498            578
Distributions on preferred securities of subsidiary companies                                1,550          1,384
                                                                                       ------------   ------------
Interest charges and other, net                                                              7,761          7,452
                                                                                       ------------   ------------
NET INCOME                                                                                   4,853          7,062
DIVIDENDS ON PREFERRED STOCK                                                                    54            209
                                                                                       ------------   ------------
NET INCOME AFTER DIVIDENDS ON
 PREFERRED STOCK                                                                           $ 4,799        $ 6,853
                                                                                       ============   ============






                 The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>

                                                                 41


                                      
<PAGE>
<TABLE>
<CAPTION>

                                                   GULF POWER COMPANY
                                     CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                            (Stated in Thousands of Dollars)

                                                                                                 For the Three Months
                                                                                                    Ended March 31,
                                                                                              ----------------------------
                                                                                                 1999             1998
                                                                                              ------------     -----------

OPERATING ACTIVITIES:
<S>                                                                                               <C>             <C>    
Net income                                                                                        $ 4,853         $ 7,062
Adjustments to reconcile net income to net cash provided by operating activities--
     Depreciation and amortization                                                                 17,026          18,518
     Deferred income taxes                                                                         (1,060)         (1,918)
     Other, net                                                                                     6,015          (1,051)
     Changes in certain current assets and liabilities--
          Receivables, net                                                                          8,090          15,544
          Inventories                                                                             (17,392)         (6,011)
          Payables                                                                                 (5,832)        (12,499)
          Taxes accrued                                                                             2,903           3,431
          Current costs of 1995 coal contract renegotiation                                             -             812
          Other                                                                                    (5,762)         (5,412)
                                                                                              ------------     -----------
Net cash provided from operating activities                                                         8,841          18,476
                                                                                              ------------     -----------
INVESTING ACTIVITIES:
Gross property additions                                                                          (12,529)        (11,148)
Other                                                                                              (9,962)         (1,974)
                                                                                              ------------     -----------
Net cash used for investing activities                                                            (22,491)        (13,122)
                                                                                              ------------     -----------
FINANCING ACTIVITIES:
Proceeds--
     Preferred securities                                                                               -          45,000
Retirements--
     Other long-term debt                                                                               -          (5,754)
Notes payable, net                                                                                 28,500         (20,500)
Payment of preferred stock dividends                                                                  (54)           (210)
Payment of common stock dividends                                                                 (15,000)        (24,100)
Miscellaneous                                                                                          (5)         (2,373)
                                                                                              ------------     -----------
Net cash provided from (used for) financing activities                                             13,441          (7,937)
                                                                                              ------------     -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                              (209)         (2,583)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                      969           4,707
                                                                                              ============     ===========
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                          $ 760         $ 2,124
                                                                                              ============     ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
     Interest (net of amount capitalized)                                                          $7,219          $6,997
     Income taxes                                                                                       -            $716





            The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>

                                                           42


                                  
<PAGE>

<TABLE>
<CAPTION>
                                                  GULF POWER COMPANY
                                               CONDENSED BALANCE SHEETS
                                           (Stated in Thousands of Dollars)

                                                        ASSETS

                                                                                          At March 31,
                                                                                           1999            At December 31,
                                                                                           (Unaudited)        1998
                                                                                       ---------------------------------
UTILITY PLANT:
<S>                                                                                       <C>                <C>       
Plant in service                                                                          $1,812,822         $1,809,901
Less accumulated provision for depreciation                                                  791,301            784,111
                                                                                       --------------     --------------
                                                                                           1,021,521          1,025,790
Construction work in progress                                                                 35,411             34,863
                                                                                        --------------     --------------
Total                                                                                      1,056,932          1,060,653
                                                                                       --------------     --------------

OTHER PROPERTY AND INVESTMENTS:                                                                1,587                588
                                                                                       --------------     --------------

CURRENT ASSETS:
Cash and cash equivalents                                                                        760                969
Receivables --
     Customer accounts receivable                                                             42,494             49,067
     Other accounts and notes receivable                                                       3,091              3,514
     Affiliated companies                                                                      2,333              3,442
     Accumulated provision for uncollectible accounts                                           (981)              (996)
Fossil fuel stock, at average cost                                                            41,757             24,213
Materials and supplies, at average cost                                                       27,873             28,025
Regulatory clauses under recovery                                                             10,657              9,737
Prepayments                                                                                    4,760              5,690
Vacation pay deferred                                                                          4,035              4,035
                                                                                       --------------     --------------
Total                                                                                        136,779            127,696
                                                                                       --------------     --------------


DEFERRED CHARGES:
Deferred charges related to income taxes                                                      25,297             25,308
Debt expense, being amortized                                                                 21,033             21,448
Prepaid pension costs                                                                         14,773             13,770
Miscellaneous                                                                                 17,520             18,438
                                                                                       --------------     --------------
Total                                                                                         78,623             78,964
                                                                                       --------------     --------------

TOTAL ASSETS                                                                              $1,273,921         $1,267,901
                                                                                       ==============     ==============




           The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>

                                                          43


                                  
<PAGE>

<TABLE>
<CAPTION>
                                                  GULF POWER COMPANY
                                               CONDENSED BALANCE SHEETS
                                           (Stated in Thousands of Dollars)

                                            CAPITALIZATION AND LIABILITIES

                                                                                          At March 31,
                                                                                           1999            At December 31,
                                                                                           (Unaudited)        1998
                                                                                       ---------------------------------
CAPITALIZATION:
<S>                                                                                         <C>               <C>
Common stock equity --
Common stock (without par value) --
     authorized and outstanding -- 992,717 shares                                           $ 38,060           $ 38,060
Paid-in capital                                                                              218,960            218,960
Premium on preferred stock                                                                        12                 12
Retained earnings                                                                            160,419            170,620
                                                                                       --------------     --------------
                                                                                             417,451            427,652
Preferred stock                                                                                4,236              4,236
Company obligated mandatorily redeemable preferred securities of
     subsidiary trusts holding Company Junior Subordinated Notes                              85,000             85,000
Long-term debt                                                                               317,420            317,341
                                                                                       --------------     --------------
Total                                                                                        824,107            834,229
                                                                                       --------------     --------------

CURRENT LIABILITIES:
Long-term debt due within one year                                                            27,000             27,000
Notes payable                                                                                 60,000             31,500
Accounts payable --
     Affiliated companies                                                                     11,949             19,756
     Other                                                                                    17,449             23,697
Customer deposits                                                                             12,600             12,560
Taxes accrued                                                                                  6,795              7,432
Interest accrued                                                                               7,023              5,184
Regulatory clauses over recovery                                                               4,424              6,037
Vacation pay accrued                                                                           4,035              4,035
Dividends declared                                                                                54                 54
Miscellaneous                                                                                  1,534              3,960
                                                                                       --------------     --------------
Total                                                                                        152,863            141,215
                                                                                       --------------     --------------

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes                                                            165,668            166,118
Deferred credits related to income taxes                                                      51,772             52,465
Accumulated provision for property damage                                                      3,230              1,605
Accumulated deferred investment tax credits                                                   29,152             29,632
Accumulated provision for postretirement benefits                                             24,608             23,534
Miscellaneous                                                                                 22,521             19,103
                                                                                       --------------     --------------
Total                                                                                        296,951            292,457
                                                                                       --------------     --------------

TOTAL CAPITALIZATION AND LIABILITIES                                                      $1,273,921         $1,267,901
                                                                                       ==============     ==============





           The accompanying notes as they relate to GULF are an integral part of these condensed statements.
</TABLE>

                                        44





<PAGE>


                               GULF POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

                    FIRST QUARTER 1999 vs. FIRST QUARTER 1998


RESULTS OF OPERATIONS

Earnings

GULF's net income after dividends on preferred stock for the first quarter of
1999 was $4.8 million, compared to $6.9 million for the corresponding period of
1998. The earnings decrease is attributed to higher maintenance expenses during
this quarter when compared to the same period in 1998.

     Significant income statement items appropriate for discussion include the
following:

                                                   Increase (Decrease)
                                           -----------------------------------
                                                      First Quarter
                                           -----------------------------------
                                              (in thousands)         %
Revenues..................................     $ (7,118)            (5.3)
Revenues from affiliates..................          674             10.5
Fuel expense..............................       (2,690)            (6.5)
Purchased power from non-affiliates ......         (577)           (12.2)
Purchased power from affiliates...........         (313)            (8.1)
Other operation expense...................       (4,139)           (13.2)
Maintenance expense.......................        3,697             28.7


     Revenues. Revenues for the first quarter decreased due primarily to the
recovery of lower fuel costs. The price per ton of coal, which is GULF's primary
fuel source, was lower in the first quarter of 1999 compared to the same period
in 1998 as the costs related to prior year coal contract renegotiations were
fully amortized by March 1998 and a major coal contract price was reduced.
Excluding recovery of fuel expense and certain other expenses that do not affect
income, retail revenues increased $1.1 million for the quarter. This increase
reflects slightly higher retail energy sales of 0.3%, which can be attributed to
customer growth in the residential and commercial classes. Revenues from
non-territorial wholesale energy sales decreased $2.6 million for the first
quarter of 1999 when compared to the corresponding period of 1998. The decrease
in non-territorial wholesale energy sales was primarily due to decreased sales
through power marketing activities. These sales were largely offset by purchases
from non-affiliates and, as a result, had no significant effect on net income.

     Revenues from affiliates and Purchased power from affiliates. Revenues from
sales to affiliated companies within the Southern electric system, as well as
purchases of energy, will vary from period to period depending on demand and the
availability and cost of generating resources at each company. These
transactions do not have a significant impact on earnings.

     Fuel expense. The decrease in fuel expense is attributed to lower fuel
costs, reflecting the reduction of a major coal contract price.



                                       45
<PAGE>


                               GULF POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



     Purchased power from non-affiliates. Purchased power from non-affiliates
decreased this quarter when compared to the same period in 1998 due primarily to
a decrease in power marketing activities, a majority of which were resold to
non-affiliated third parties. These transactions had no significant effect on 
net income.

     Other operation expense. This item decreased in this quarter when compared
to the same period in 1998 due to prior year payments related to renegotiations
of coal supply contracts being fully amortized by March 1998.

     Maintenance expense.  These costs for the first quarter of 1999 increased
 primarily due to scheduled outages at production facilities.


Future Earnings Potential

The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from energy sales growth to a less regulated, more competitive
environment.

     With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of GULF and Item 1 - BUSINESS "Competition" in the
Form 10-K.

     Compliance costs related to the Clean Air Act could affect earnings if such
costs are not fully recovered through GULF's Environmental Cost Recovery Clause.
For additional information about the Clean Air Act and other environmental
issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental
Matters" of GULF in the Form 10-K.

     GULF's plans to achieve Year 2000 readiness have been implemented and are
included in the SOUTHERN system's Year 2000 Program. The costs related to GULF's
Year 2000 program are expected to be $4.9 million. From its inception through
March 31, 1999, the Year 2000 program costs, recognized as expense, amounted to
$3.7 million. For additional information, see SOUTHERN's MANAGEMENT'S DISCUSSION
AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - "Future Earnings
Potential" herein.

     In reference to the ongoing matters with the Florida PSC concerning GULF's
authorized return on equity (ROE) and the outstanding balances of certain
regulatory assets, GULF filed a revised plan on April 6, 1999. The staff
countered with another proposal filed on April 8, 1999. At the agenda conference
on April 20, 1999, the Florida PSC approved the staff's plan with several
modifications. The changes approved by the Florida PSC include the following: a
reduction in the authorized return mid-point from 12.0% to 11.5%, the sharing of
revenues for a period of 3 years above an earnings level of 12.5% ROE up to
14.0% ROE, revenue credits to customers and the write-off of regulatory assets
totaling $7.1 million per year from 1999 through 2001. An order outlining the
changes associated with earnings, revenue sharing, and other regulatory issues
will be issued by the Florida PSC. Any interested party will have the
opportunity to protest the order within 20 days from the date of the order. For
additional information, see Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" and Item 1 - BUSINESS - "Regulation - State
Commissions" of GULF in the Form 10-K.


                                       46

<PAGE>


                               GULF POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION


     The FASB has issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which must be adopted by the year 2000. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. Adoption of this statement is not
expected to have a material impact on GULF's financial statements.

     Reference is made to Notes (B) and (F) in the "Notes to the Condensed
Financial Statements" herein for discussion of various contingencies and other
matters which may affect future earnings potential.


FINANCIAL CONDITION

Overview

Major changes in GULF's financial condition during the first three months of
1999 included the addition of approximately $12.5 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operations. See GULF's Condensed Statements of Cash Flows for further
details.

Financing Activities

     GULF plans to continue, to the extent possible, a program to retire
higher-cost debt and preferred stock and replace these securities with
lower-cost capital.

Capital Requirements

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GULF
under "Capital Requirements for Construction," "Environmental Matters" and
"Other Capital Requirements" in the Form 10-K for a description of GULF's
capital requirements for its construction program, environmental compliance
efforts and maturing debt.

Sources of Capital

In addition to the financing activities previously described herein, GULF plans
to obtain the funds required for construction and other purposes from sources
similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. See Item 1
- BUSINESS "Financing Programs" in the Form 10-K for additional information.

     To meet short-term cash needs and contingencies, GULF had at March 31,
1999, approximately $760 thousand of cash and cash equivalents and $31.5 million
of unused committed lines of credit with banks in addition to $61.9 million
liquidity support for variable rate pollution control bonds. At March 31, 1999,
GULF had $60.0 million of short-term notes payable to banks. Management believes
that the need for working capital can be adequately met by utilizing lines of
credit without maintaining large cash balances.



                                       47


<PAGE>


                            MISSISSIPPI POWER COMPANY



                                       48
<PAGE>
<TABLE>
<CAPTION>



                                                          MISSISSIPPI POWER COMPANY
                                             CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                                                  (Stated in Thousands of Dollars)

                                                                                            For the Three Months
                                                                                              Ended March 31,
                                                                                         ---------------------------
                                                                                             1999           1998
                                                                                         ------------   ------------

OPERATING REVENUES:
<S>                                                                                         <C>            <C>     
Revenues                                                                                    $121,400       $121,281
Revenues from affiliates                                                                       1,035            875
                                                                                         ------------   ------------
Total operating revenues                                                                     122,435        122,156
                                                                                         ------------   ------------

OPERATING EXPENSES:
Operation--
  Fuel                                                                                        31,522         27,288
  Purchased power from non-affiliates                                                          2,345          4,300
  Purchased power from affiliates                                                              8,902         11,296
  Other                                                                                       27,047         23,846
Maintenance                                                                                   11,601         11,394
Depreciation and amortization                                                                 11,789         11,653
Taxes other than income taxes                                                                 11,107         12,080
Federal and state income taxes                                                                 4,273          4,932
                                                                                         ------------   ------------
Total operating expenses                                                                     108,586        106,789
                                                                                         ------------   ------------
OPERATING INCOME                                                                              13,849         15,367
OTHER INCOME (EXPENSE):
Interest income                                                                                   81             50
Other, net                                                                                       634            233
Income taxes applicable to other income                                                         (309)          (313)
                                                                                         ------------   ------------
INCOME BEFORE INTEREST CHARGES                                                                14,255         15,337
                                                                                         ------------   ------------
INTEREST AND OTHER CHARGES:
Interest on long-term debt                                                                     5,010          4,798
Interest on notes payable                                                                        412            428
Amortization of debt discount, premium and expense, net                                          356            388
Other interest charges                                                                            82            141
Distributions on preferred securities of subsidiary companies                                    699            699
                                                                                         ------------   ------------
Interest and other charges, net                                                                6,559          6,454
                                                                                         ------------   ------------
NET INCOME                                                                                     7,696          8,883
DIVIDENDS ON PREFERRED STOCK                                                                     503            495
                                                                                         ------------   ------------
NET INCOME AFTER DIVIDENDS ON
 PREFERRED STOCK                                                                             $ 7,193        $ 8,388
                                                                                         ============   ============




              The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.

</TABLE>
                                                                 49



                                    
<PAGE>

<TABLE>
<CAPTION>
                                                MISSISSIPPI POWER COMPANY
                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                            (Stated in Thousands of Dollars)

                                                                                                 For the Three Months
                                                                                                    Ended March 31,
                                                                                              ----------------------------
                                                                                                 1999             1998
                                                                                              ------------     -----------

OPERATING ACTIVITIES:
<S>                                                                                               <C>             <C>    
Net income                                                                                        $ 7,696         $ 8,883
Adjustments to reconcile net income to net cash provided by operating activities--
     Depreciation and amortization                                                                 12,801          12,680
     Deferred income taxes                                                                           (991)             72
     Other, net                                                                                    (2,927)           (492)
     Changes in certain current assets and liabilities--
          Receivables, net                                                                          2,570           3,604
          Inventories                                                                              (6,109)         (5,457)
          Payables                                                                                 (8,912)         (5,732)
          Taxes accrued                                                                           (15,750)        (16,612)
          Other                                                                                    (3,582)         (2,537)
                                                                                              ------------     -----------
Net cash used for operating activities                                                            (15,204)         (5,591)
                                                                                              ------------     -----------
INVESTING ACTIVITIES:
Gross property additions                                                                          (12,897)        (12,886)
Other                                                                                              (6,314)         (4,933)
                                                                                              ------------     -----------
Net cash used for investing activities                                                            (19,211)        (17,819)
                                                                                              ------------     -----------
FINANCING ACTIVITIES:
Retirements--
     Preferred stock                                                                                    -             (87)
     First mortgage bonds                                                                               -         (35,000)
Notes payable, net                                                                                 48,500          69,000
Payment of preferred stock dividends                                                                 (503)           (495)
Payment of common stock dividends                                                                 (13,800)        (12,700)
Miscellaneous                                                                                           -             (16)
                                                                                              ------------     -----------
Net cash provided from financing activities                                                        34,197          20,702
                                                                                              ------------     -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                              (218)         (2,708)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                    1,327           4,432
                                                                                              ============     ===========
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                        $ 1,109         $ 1,724
                                                                                              ============     ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
     Interest (net of amount capitalized)                                                          $4,543          $4,509
     Income taxes                                                                                  $1,900           ($534)



        The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>

                                                           50


                                      
<PAGE>

<TABLE>
<CAPTION>
                                               MISSISSIPPI POWER COMPANY
                                               CONDENSED BALANCE SHEETS
                                           (Stated in Thousands of Dollars)

                                                        ASSETS

                                                                                          At March 31,
                                                                                           1999            At December 31,
                                                                                           (Unaudited)        1998
                                                                                       ---------------------------------
UTILITY PLANT:
<S>                                                                                       <C>                <C>       
Plant in service, at original cost                                                        $1,556,279         $1,553,112
Less accumulated provision for depreciation                                                  594,641            583,957
                                                                                       --------------     --------------
                                                                                             961,638            969,155
Construction work in progress                                                                 62,569             51,517
                                                                                       --------------     --------------
Total                                                                                      1,024,207          1,020,672
                                                                                       --------------     --------------

OTHER PROPERTY AND INVESTMENTS:                                                                  978                979
                                                                                       --------------     --------------

CURRENT ASSETS:
Cash and cash equivalents                                                                      1,109              1,327
Receivables --
     Customer accounts receivable                                                             23,309             29,829
     Regulatory clauses under recovery                                                         8,762              8,042
     Other accounts and notes receivable                                                      14,469             12,495
     Affiliated companies                                                                     12,014             10,946
     Accumulated provision for uncollectible accounts                                           (433)              (621)
Fossil fuel stock, at average cost                                                            22,591             16,418
Materials and supplies, at average cost                                                       18,671             18,735
Current portion of accumulated deferred income taxes                                           5,187              4,248
Prepayments                                                                                    6,136              1,651
Vacation pay deferred                                                                          4,717              4,717
                                                                                       --------------     --------------
Total                                                                                        116,532            107,787
                                                                                       --------------     --------------


DEFERRED CHARGES:
Debt expense and loss, being amortized                                                        13,386             13,713
Deferred charges related to income taxes                                                      21,110             22,697
Long-term notes receivable                                                                     1,846              2,072
Work force reduction plan                                                                     11,210             12,748
Miscellaneous                                                                                 10,389              8,937
                                                                                       --------------     --------------
Total                                                                                         57,941             60,167
                                                                                       --------------     --------------

TOTAL ASSETS                                                                              $1,199,658         $1,189,605
                                                                                       ==============     ==============


 
       The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>


                                                          51


                                      
<PAGE>

<TABLE>
<CAPTION>
                                               MISSISSIPPI POWER COMPANY
                                               CONDENSED BALANCE SHEETS
                                           (Stated in Thousands of Dollars)

                                            CAPITALIZATION AND LIABILITIES

                                                                                          At March 31,
                                                                                           1999            At December 31,
                                                                                         (Unaudited)        1998
                                                                                       ---------------------------------
CAPITALIZATION:
<S>                                                                                         <C>               <C>
Common stock equity --
Common stock (without par value) --
 authorized 1,130,000 shares; outstanding 1,121,000 shares                                  $ 37,691           $ 37,691
Paid-in capital                                                                              179,473            179,474
Premium on preferred stock                                                                       326                326
Retained earnings                                                                            167,134            173,740
                                                                                       --------------     --------------
                                                                                             384,624            391,231
Preferred stock                                                                               31,809             31,809
Company obligated mandatorily redeemable preferred securities of
 subsidiary trust holding Company Junior Subordinated Notes                                   35,000             35,000
Long-term debt                                                                               292,773            292,744
                                                                                       --------------     --------------
Total                                                                                        744,206            750,784
                                                                                       --------------     --------------

CURRENT LIABILITIES:
Long-term debt due within one year                                                            50,020             50,020
Notes payable                                                                                 61,500             13,000
Accounts payable --
     Affiliated companies                                                                      9,163              8,788
     Regulatory clauses over recovery                                                          5,802              4,412
     Other                                                                                    31,251             47,113
Customer deposits                                                                              3,366              3,272
Taxes accrued--
     Federal and state income                                                                  4,844              1,124
     Other                                                                                    11,909             31,379
Interest accrued                                                                               4,616              2,955
Miscellaneous                                                                                 10,758             11,753
                                                                                       --------------     --------------
Total                                                                                        193,229            173,816
                                                                                       --------------     --------------

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes                                                            144,315            143,852
Accumulated deferred investment tax credits                                                   25,605             25,913
Deferred credits related to income taxes                                                      35,175             37,277
Postretirement benefits other than pension                                                    26,050             25,869
Accumulated provision for property damage                                                      1,291                910
Work force reduction plan                                                                     12,496             13,051
Miscellaneous                                                                                 17,291             18,133
                                                                                       --------------     --------------
Total                                                                                        262,223            265,005
                                                                                       --------------     --------------

TOTAL CAPITALIZATION AND LIABILITIES                                                      $1,199,658         $1,189,605
                                                                                       ==============     ==============




       The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
</TABLE>

                                        52

<PAGE>


                            MISSISSIPPI POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

                    FIRST QUARTER 1999 vs. FIRST QUARTER 1998


RESULTS OF OPERATIONS

Earnings

MISSISSIPPI's net income after dividends on preferred stock for the first
quarter of 1999 was $7.2 million compared to $8.4 million for the same period of
1998. The decrease in earnings is attributed to increased operating expenses.

     Significant income statement items appropriate for discussion include the
following:

                                                     Increase (Decrease)
                                                -------------------------------
                                                        First Quarter
                                                -------------------------------
                                                  (in thousands)        %
Revenues........................................   $     119            0.1
Revenues from affiliates........................         160           18.3
Fuel expense....................................       4,234           15.5
Purchased power from non-affiliates ............      (1,955)         (45.5)
Purchased power from affiliates.................      (2,394)         (21.2)
Other operation expense.........................       3,201           13.4



     Revenues. The slight improvement in revenues for this quarter reflects
increased energy sales in the retail sector, in particular to commercial
customers. This revenue increase was partially offset by a decrease in
non-territorial energy sales. Revenues from territorial energy sales increased
$3.2 million and revenues from non-territorial energy sales decreased $2.3
million. Energy sales to commercial customers increased due to increased tourism
and continued growth in this sector. Retail revenues, excluding those revenues
which represent the recovery of fuel expense and certain other expenses and do
not affect income, decreased $650 thousand for the current quarter. Wholesale
territorial revenues, excluding fuel revenues which do not affect income,
increased $3.1 million for the current quarter.

     Revenues from affiliates and Purchased power from affiliates. Revenues from
sales to affiliated companies within the Southern electric system, as well as
purchases of energy, will vary from period to period depending on demand and the
availability and cost of generating resources at each company. These
transactions do not have a significant impact on earnings.


                                       53
<PAGE>


                            MISSISSIPPI POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION




     Fuel expense. These costs increased during the current quarter due to an
increase in generation resulting from a higher demand for energy.

     Purchased power from non-affiliates. This item decreased when compared to
the same period in 1998 due primarily to increased availability of generation
from MISSISSIPPI's generating plants.

     Other operation expense. The increase for this quarter compared to the same
period in 1998 is attributed primarily to increased administrative and general
expenses. The expenses rose due to higher amortization of deferred costs for the
work force reduction plan and increased Year 2000 expenses.


Future Earnings Potential

The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from energy sales growth to a less regulated, more competitive
environment. Operating revenues will be affected by any changes in rates under
the PEP and ECO plans. The PEP has proven to be a stabilizing force on electric
rates, with only moderate changes in rates taking place.

     With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 1 - BUSINESS - "Competition" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of
MISSISSIPPI in the Form 10-K.

     Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be recovered. MISSISSIPPI's 1999 ECO Plan filing was approved, as
filed, by the Mississippi PSC on March 18, 1999 and resulted in a slight
increase in customer prices. For additional information about the Clean Air Act
and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Environmental Matters" of MISSISSIPPI in the Form 10-K.

     MISSISSIPPI's plans to achieve Year 2000 readiness have been implemented
and are included in the SOUTHERN system's Year 2000 Program. The costs related
to MISSISSIPPI's Year 2000 program are expected to be $4.9 million. From its
inception through March 31, 1999, the Year 2000 program costs, recognized as
expense, amounted to $3.9 million. For additional information, see SOUTHERN's
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION - "Future Earnings Potential" herein.


                                       54
<PAGE>


                            MISSISSIPPI POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



     The FASB has issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which must be adopted by the year 2000. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. MISSISSIPPI has not yet quantified the
impact of adopting this statement on its financial statements; however, the
adoption could increase volatility in earnings.

     Reference is made to Notes (B) and (F) in the "Notes to the Condensed
Financial Statements" herein for discussion of various contingencies and other
matters which may affect future earnings potential.


FINANCIAL CONDITION

Overview

Major changes in MISSISSIPPI's financial condition during the first three months
of 1999 included the addition of approximately $12.9 million to utility plant.
The funds for these additions and other capital requirements were derived
primarily from operations. See MISSISSIPPI's Condensed Statements of Cash Flows
for further details.

Financing Activities

     MISSISSIPPI plans to continue, to the extent possible, a program to retire
higher-cost debt and replace these securities with lower-cost capital.

Capital Requirements

In April 1999, MISSISSIPPI and Escatawpa Funding ("Escatawpa"), a limited
partnership, entered into a lease agreement whereby MISSISSIPPI will design and
construct, as agent for Escatawpa, a 1,064 megawatt natural gas combined cycle
facility. It is expected that the project will cost approximately $406 million,
and upon completion of the facility, MISSISSIPPI will lease the facility from
Escatawpa for an initial term of approximately 10 years. For additional 
information, reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND 
ANALYSIS - "Capital Requirements for Construction" of MISSISSIPPI and Notes 3 
and 4 to the financial statements of MISSISSIPPI in Item 8 of the Form 10-K.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of
MISSISSIPPI under "Capital Requirements for Construction," "Environmental
Matters" and "Other Capital Requirements" in the Form 10-K for a description of
MISSISSIPPI's capital requirements for its construction program, environmental
compliance efforts, sinking fund requirements and maturities of long-term debt.

Sources of Capital

In addition to the financing activities previously described herein, MISSISSIPPI
plans to obtain the funds required for construction and other purposes from
sources similar to those used in the past. The amount, type and timing of any
financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. See Item 1
BUSINESS - "Financing Programs" in the Form 10-K for additional information.


                                       55
<PAGE>


                            MISSISSIPPI POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION




     To meet short-term cash needs and contingencies, MISSISSIPPI had at March
31, 1999, approximately $1.1 million of cash and cash equivalents and
approximately $76.3 million of unused committed credit arrangements with banks
(including $10.8 million of such arrangements under which borrowings may be made
only to fund purchase obligations relating to variable rate pollution control
bonds). At March 31, 1999, MISSISSIPPI had short-term notes payable outstanding
of $61.5 million. Management believes that the need for working capital can be
adequately met by utilizing lines of credit without maintaining large cash
balances.

                                       56
<PAGE>


                                SAVANNAH ELECTRIC
                                       AND
                                  POWER COMPANY


                                       57
<PAGE>
<TABLE>
<CAPTION>


                                                SAVANNAH ELECTRIC AND POWER COMPANY
                                           CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                                                (Stated in Thousands of Dollars)

                                                                                                           For the Three Months
                                                                                                              Ended March 31,
                                                                                                          ------------------------
                                                                                                              1999         1998
                                                                                                          -----------  -----------

OPERATING REVENUES:
<S>                                                                                                          <C>          <C>    
Revenues                                                                                                     $46,732      $48,209
Revenues from Affiliates                                                                                         366          172
                                                                                                          -----------  -----------
Total operating revenues                                                                                      47,098       48,381
                                                                                                          -----------  -----------

OPERATING EXPENSES:
Operation--
  Fuel                                                                                                         6,593        5,808
  Purchased power from non-affiliates                                                                          1,092        1,213
  Purchased power from affiliates                                                                              9,177       10,164
  Other                                                                                                       11,279       11,145
Maintenance                                                                                                    4,439        3,678
Depreciation and amortization                                                                                  5,977        5,258
Taxes other than income taxes                                                                                  2,904        2,838
Federal and state income taxes                                                                                   720        2,063
                                                                                                          -----------  -----------
Total operating expenses                                                                                      42,181       42,167
                                                                                                          -----------  -----------
OPERATING INCOME                                                                                               4,917        6,214
OTHER INCOME (EXPENSE):
Allowance for equity funds used during construction                                                               21           21
Interest income                                                                                                   36           68
Other, net                                                                                                      (444)        (429)
Income taxes applicable to other income                                                                          158          133
                                                                                                          -----------  -----------
INCOME BEFORE INTEREST CHARGES                                                                                 4,688        6,007
                                                                                                          -----------  -----------
INTEREST AND OTHER CHARGES:
Interest on long-term debt                                                                                     2,475        2,710
Allowance for debt funds used during construction                                                                (26)         (26)
Interest on notes payable                                                                                         21           26
Amortization of debt discount, premium and expense, net                                                          233          187
Distributions on preferred securities of subsidiary trust                                                        685            -
Other interest charges                                                                                            91          103
                                                                                                          -----------  -----------
Interest and other charges, net                                                                                3,479        3,000
                                                                                                          -----------  -----------
NET INCOME                                                                                                     1,209        3,007
DIVIDENDS ON PREFERRED STOCK                                                                                       -          581
                                                                                                          -----------  -----------
NET INCOME AFTER DIVIDENDS ON
 PREFERRED STOCK                                                                                              $1,209       $2,426
                                                                                                          ===========  ===========





              The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.

</TABLE>


                                                               58


                                  
<PAGE>

<TABLE>
<CAPTION>
                                          SAVANNAH ELECTRIC AND POWER COMPANY
                                     CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                            (Stated in Thousands of Dollars)

                                                                                                 For the Three Months
                                                                                                   Ended March 31,
                                                                                              ---------------------------
                                                                                                 1999            1998
                                                                                              -----------     -----------

OPERATING ACTIVITIES:
<S>                                                                                              <C>              <C>   
Net income                                                                                       $ 1,209          $3,007
Adjustments to reconcile net income to net cash provided by operating activities--
     Depreciation and amortization                                                                 6,438           5,654
     Deferred income taxes and investment tax credits, net                                          (555)             20
     Allowance for equity funds used during construction                                             (21)            (21)
     Other, net                                                                                    1,329            (691)
     Changes in certain current assers and liabilities--
          Receivables, net                                                                         2,913           4,917
          Inventories                                                                               (348)         (1,778)
          Payables                                                                                (4,064)         (3,049)
          Taxes accrued                                                                             (635)         (1,143)
          Other                                                                                      627          (3,333)
                                                                                              -----------     -----------
Net cash provided from operating activities                                                        6,893           3,583
                                                                                              -----------     -----------
INVESTING ACTIVITIES:
Gross property additions                                                                          (9,398)         (4,250)
Other                                                                                                175            (703)
                                                                                              -----------     -----------
Net cash used for investing activities                                                            (9,223)         (4,953)
                                                                                              -----------     -----------
FINANCING ACTIVITIES:
Proceeds--
     Other long-term debt                                                                              -          30,000
Retirements--
     First mortgage bonds                                                                              -          (1,100)
     Other long-term debt                                                                           (182)           (167)
Notes payable, net                                                                                 6,500           3,000
Payment of preferred stock dividends                                                                   -            (581)
Payment of common stock dividends                                                                 (6,200)         (5,800)
Miscellaneous                                                                                        (12)           (703)
                                                                                              -----------     -----------
Net cash provided from financing activities                                                          106          24,649
                                                                                              -----------     -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                           (2,224)         23,279
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                   5,962           6,144
                                                                                              ===========     ===========
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                       $ 3,738         $29,423
                                                                                              ===========     ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
     Interest (net of amount capitalized)                                                         $3,209          $3,332
     Income taxes                                                                                      -            $984




         The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>


                                                           59


                                   
<PAGE>

<TABLE>
<CAPTION>
                                        SAVANNAH ELECTRIC AND POWER COMPANY
                                              CONDENSED BALANCE SHEETS
                                          (Stated in Thousands of Dollars)

                                                       ASSETS

                                                                                         At March 31,
                                                                                          1999           At December 31,
                                                                                        (Unaudited)        1998
                                                                                       ------------------------------
UTILITY PLANT:
<S>                                                                                       <C>               <C>     
Plant in service, at original cost                                                        $788,416          $781,964
Less accumulated provision for depreciation                                                347,082           341,930
                                                                                       ------------     -------------
                                                                                           441,334           440,034
Construction work in progress                                                                5,123             2,908
                                                                                       ------------     -------------
Total                                                                                      446,457           442,942
                                                                                       ------------     -------------

OTHER PROPERTY AND INVESTMENTS:                                                              1,420             1,420
                                                                                       ------------     -------------

CURRENT ASSETS:
Cash and cash equivalents                                                                    3,738             5,962
Receivables --
     Customer accounts receivable                                                           15,685            18,030
     Other accounts and notes receivable                                                     3,661             3,543
     Affiliated companies                                                                    2,416             1,388
     Accumulated provision for uncollectible accounts                                         (209)             (284)
     Fuel cost under recovery                                                               15,839            17,628
Fossil fuel stock, at average cost                                                           4,789             4,984
Materials and supplies, at average cost                                                      7,039             6,496
Prepayments                                                                                  4,709             4,772
                                                                                       ------------     -------------
Total                                                                                       57,667            62,519
                                                                                       ------------     -------------


DEFERRED CHARGES:
Deferred charges related to income taxes                                                    17,096            17,130
Debt issue expense, being amortized                                                          3,530             3,554
Premium on reacquired debt, being amortized                                                  8,373             8,570
Prepaid pension costs                                                                        2,758             3,281
Cash surrender value of life insurance for deferred compensation plans                      14,179            14,179
Miscellaneous                                                                                2,678             2,204
                                                                                       ------------     -------------
Total                                                                                       48,614            48,918
                                                                                       ------------     -------------

TOTAL ASSETS                                                                              $554,158          $555,799
                                                                                       ============     =============






       The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>


                                                         60


                                       
<PAGE>

<TABLE>
<CAPTION>
                                        SAVANNAH ELECTRIC AND POWER COMPANY
                                              CONDENSED BALANCE SHEETS
                                          (Stated in Thousands of Dollars)

                                           CAPITALIZATION AND LIABILITIES

                                                                                         At March 31,
                                                                                          1999           At December 31,
                                                                                          (Unaudited)       1998
                                                                                       ------------------------------
CAPITALIZATION:
<S>                                                                                       <C>                <C>
Common stock equity --
Common stock (par value value $5 per share) --
  authorized 16,000,000 shares; outstanding 10,844,635 shares                              $54,223           $54,223
Paid-in capital                                                                              8,688             8,688
Retained earnings                                                                          107,963           112,954
                                                                                       ------------     -------------
                                                                                           170,874           175,865
Company obligated mandatorily redeemable preferred securities of
  subsidiary trust holding Company Junior Subordinated Notes                                40,000            40,000
Long-term debt                                                                             163,274           163,443
                                                                                       ------------     -------------
Total                                                                                      374,148           379,308
                                                                                       ------------     -------------

CURRENT LIABILITIES:
Long-term debt due within one year                                                             676               689
Notes payable                                                                                6,500                 -
Accounts payable --
     Affiliated companies                                                                    5,392             5,014
     Other                                                                                   6,533            10,833
Customer deposits                                                                            5,321             5,224
Taxes accrued--
     Federal and state income                                                                1,589             2,467
     Other                                                                                   2,256             2,891
Interest accrued                                                                             3,862             3,815
Vacation pay accrued                                                                         2,008             1,978
Miscellaneous                                                                                7,090             6,700
                                                                                       ------------     -------------
Total                                                                                       41,227            39,611
                                                                                       ------------     -------------

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income taxes                                                           83,098            82,778
Accumulated deferred investment tax credits                                                 11,777            11,943
Deferred credits related to income taxes                                                    21,318            21,349
Deferred compensation plans                                                                  9,976             9,788
Postretirement benefits                                                                      6,824             6,434
Miscellaneous                                                                                5,790             4,588
                                                                                       ------------     -------------
Total                                                                                      138,783           136,880
                                                                                       ------------     -------------

TOTAL CAPITALIZATION AND LIABILITIES                                                      $554,158          $555,799
                                                                                       ============     =============





       The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
</TABLE>


                                        61




<PAGE>


                       SAVANNAH ELECTRIC AND POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

                    FIRST QUARTER 1999 vs. FIRST QUARTER 1998


RESULTS OF OPERATIONS

Earnings

SAVANNAH's net income after dividends on preferred stock for the first quarter
of 1999 was $1.2 million as compared to $2.4 million for the same period of
1998. The earnings decrease is attributed to lower operating revenues and
increased operating expenses, both reflecting the Georgia PSC's accounting
order. For additional information, see Note (N) in the "Notes to the Condensed
Financial Statements" herein for details regarding the accounting order.

     Significant income statement items appropriate for discussion include the
following:

                                                   Increase (Decrease)
                                               ------------------------------
                                                      First Quarter
                                               ------------------------------
                                                (in thousands)        %
Revenues.......................................    $(1,477)          (3.1)
Fuel expense...................................        785           13.5
Maintenance expense............................        761           20.7
Depreciation and amortization expense..........        719           13.7
Interest on long-term debt.....................        450           16.6
Dividends on preferred stock...................       (581)        (100.0)

     Revenues. The drop in first quarter 1999 revenues is primarily attributed
to a decrease in total energy sales primarily to territorial customers and the
tariff reduction implemented as a part of the Georgia PSC accounting order.
Territorial energy sales to residential and commercial customers were up 3.4%
and 1.3%, but were down 30.9% to industrial customers. Energy sales were down to
industrial customers due to low demand from one industrial customer and the
shut-down of another industrial customer's facilities. For additional
information, see "Future Earnings Potential" herein.

     Fuel expenses.  These costs rose from the same period in 1998 due to 
higher generation and a change in fuel mix.

     Maintenance expense.  The first quarter of 1999 increase is attributed
primarily to the timing of maintenance expenses at steam generating facilities.

     Depreciation and amortization expense. This item increased during this
quarter compared to the corresponding period in 1998 due mainly to additional
depreciation charges pursuant to the Georgia PSC accounting order.

     Interest on long-term debt. During the first quarter of 1999, interest on
long-term debt increased when compared to the same period in 1998 due to a
higher level of debt.

     Dividends on preferred stock.  The change in this item is a direct result
of the redemption in November 1998 of all of SAVANNAH's outstanding preferred
stock.

                                       62

<PAGE>


                       SAVANNAH ELECTRIC AND POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION


Future Earnings Potential

The results of operations discussed above are not necessarily indicative of
future earnings potential. The level of future earnings depends on numerous
factors ranging from energy sales growth to a less regulated, more competitive
environment.

     In June 1998, the Georgia PSC approved a four-year accounting order for
SAVANNAH. Reference is made to Note (N) in the "Notes to the Condensed Financial
Statements" herein and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future
Earnings Potential" of SAVANNAH in the Form 10-K for additional information.

     In August, 1998, one of SAVANNAH's largest industrial customers added its
own steam turbine unit. The impact to SAVANNAH's revenues from one period to the
next will be determined by the reliability of the unit and market conditions.
Further, in October 1998, another of Savannah's largest customers shut-down its
Savannah operations indefinitely. Base revenues from this customer had averaged
$2 million annually or approximately $500 thousand per quarter. Under the terms
of SAVANNAH's contract this customer is obligated to pay $1.1 million annually
through 2004. In the first quarter of 1999, the impact on SAVANNAH's revenues
from this shut-down was $0.2 million.

     With the enactment of the Energy Act and new legislation being discussed at
federal and state levels to expand customer choice, the Southern electric system
is positioning the business to meet the challenge of increasing competition. For
additional information, see Item 1 - BUSINESS - "Competition" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SAVANNAH
in the Form 10-K.

     Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be offset. For additional information about the Clean Air Act and
other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of SAVANNAH in the Form 10-K.

     SAVANNAH's plans to achieve Year 2000 readiness have been implemented and
are included in the SOUTHERN system's Year 2000 Program. The costs related to
SAVANNAH's Year 2000 program are expected to be $1.2 million. From its inception
through March 31, 1999, the Year 2000 program costs, recognized as expense,
amounted to $0.9 million. For additional information, see SOUTHERN's
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION - "Future Earnings Potential" herein.

     The FASB has issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which must be adopted by the year 2000. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SAVANNAH has not yet quantified the
impact of adopting this statement on its financial statements; however, the
adoption could increase volatility in earnings.

     Reference is made to Notes (B) and (N) in the "Notes to the Condensed
Financial Statements" herein for discussion of various contingencies and other
matters which may affect future earnings potential.


                                       63
<PAGE>


                       SAVANNAH ELECTRIC AND POWER COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION



FINANCIAL CONDITION

Overview

Major changes in SAVANNAH's financial condition during the first three months of
1999 included the addition of approximately $9.4 million to utility plant. The
funds for these additions and other capital requirements were derived primarily
from operations. See SAVANNAH's Condensed Statements of Cash Flows for further
details.

Financing Activities

     SAVANNAH plans to continue, to the extent possible, a program to retire
higher-cost debt and replace these obligations with lower-cost capital.

Sources of Capital

SAVANNAH plans to obtain the funds required for construction and other purposes
from sources similar to those used in the past. The amount, type and timing of
any financings--if needed--will depend upon maintenance of adequate earnings,
regulatory approval, prevailing market conditions and other factors. See Item 1
- BUSINESS - "Financing Programs" in the Form 10-K for additional information.

     To meet short-term cash needs and contingencies, SAVANNAH had at March 31,
1999, approximately $3.7 million of cash and cash equivalents and approximately
$54 million of unused credit arrangements with banks. At March 31, 1999,
SAVANNAH had $6.5 million outstanding of notes payable to banks. Since SAVANNAH
has no major generating plants under construction, management believes that the
need for working capital can be adequately met by utilizing lines of credit.



                                       64



<PAGE>


                   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
                       SAVANNAH ELECTRIC AND POWER COMPANY


                          INDEX TO APPLICABLE NOTES TO
                       FINANCIAL STATEMENTS BY REGISTRANT


    Registrant                 Applicable Notes

    SOUTHERN                   A, B, C, D, E, F, H, I, J, K, L, M, O, P

    ALABAMA                    A, B, C, F, G, H, I, J

    GEORGIA                    A, B, C, F, G, K, L, M

    GULF                       A, B, F

    MISSISSIPPI                A, B, F

    SAVANNAH                   A, B, N



                                       65

<PAGE>


                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                              ALABAMA POWER COMPANY
                              GEORGIA POWER COMPANY
                               GULF POWER COMPANY
                            MISSISSIPPI POWER COMPANY
                       SAVANNAH ELECTRIC AND POWER COMPANY


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:

(A)  The condensed financial  statements of the registrants included herein have
     been prepared by each registrant,  without audit, pursuant to the rules and
     regulations of the SEC. In the opinion of each registrant's management, the
     information   regarding  such  registrant  furnished  herein  reflects  all
     adjustments  necessary to present  fairly the results for the periods ended
     March 31,  1999 and 1998.  Certain  information  and  footnote  disclosures
     normally  included in  financial  statements  prepared in  accordance  with
     generally  accepted  accounting  principles  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.  It is suggested that these condensed
     financial  statements be read in conjunction with the financial  statements
     and the notes thereto included in each registrant's latest annual report on
     Form 10-K.  Certain prior period amounts have been  reclassified to conform
     with current period presentation.

         The condensed financial statements of ALABAMA and GEORGIA included
      herein have been reviewed by ALABAMA's and GEORGIA's independent public
      accountants as set forth in their reports included herein as Exhibit 1 to
      ALABAMA's and GEORGIA's condensed financial statements.

(B)   SOUTHERN's operating affiliates are subject to the provisions of FASB
      Statement No. 71, Accounting for the Effects of Certain Types of
      Regulation. In the event that a portion of a company's operations is no
      longer subject to these provisions, the company would be required to write
      off related unrecoverable regulatory assets and liabilities, and determine
      if any other assets have been impaired. For additional information, see
      Note 1 to the financial statements of each registrant in Item 8 of the
      Form 10-K.

(C)   The staff of the SEC has questioned certain of the current accounting
      practices of the electric utility industry--including
      SOUTHERN's--regarding the recognition, measurement and classification of
      decommissioning costs for nuclear generating facilities in the financial
      statements. In response to these questions, the FASB has decided to review
      the accounting for obligations related to the retirement of long-lived
      assets, including nuclear decommissioning. Reference is made to
      MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of
      SOUTHERN, ALABAMA and GEORGIA in Item 7 and Note 1 to the financial
      statements of SOUTHERN, ALABAMA and GEORGIA under "Depreciation and
      Nuclear Decommissioning" in Item 8 of the Form 10-K.

(D)   SOUTHERN engages in price risk management activities. Reference is made to
      MANAGEMENT'S DISCUSSION AND ANALYSIS - "Derivative Financial Instruments"
      and Note 1 to the financial statements of SOUTHERN in Item 8 of the Form
      10-K for a discussion of these activities. Activities for non-trading
      purposes consist of transactions that are employed to mitigate SOUTHERN's
      risk related to interest rate and foreign currency exchange rate
      fluctuations. At March 31, 1999, the status of outstanding non-trading
      related derivative contracts was as follows:


                                       66
<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)

<TABLE>
<CAPTION>

                                                  Year of
                                                Maturity or            Notional              Unrealized
                     Type                      Termination              Amount              Gain (Loss)
                                                                                (in thousands)
<S>                                                <C>           <C>                        <C>      
      Interest rate swaps                          2002-2016           $892,120             $(48,943)
                                                   2001-2012     (pound)600,000             $(129,376)
                                                   2002-2007          DM691,000             $(30,770)

      Cross currency swaps                         2001-2007     (pound)413,800             $31,556
      Cross currency swaption                           2003          DM555,000             $(2,377)
         (pound) - Denotes British pounds sterling.
         DM - Denotes Deutschemark.
</TABLE>

      In January 1998, Southern Energy and Vastar Resources, Inc. combined their
      energy trading and marketing activities to form a joint venture. Southern
      Energy's investment in the joint venture is accounted for under the equity
      method of accounting. SOUTHERN and Vastar have jointly made guarantees to
      certain counterparties regarding performance of contractual commitments by
      the joint venture. At March 31, 1999, outstanding guarantees related to
      the estimated fair value of net contractual commitments were approximately
      $79 million. Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS -
      "Future Earnings Potential" of SOUTHERN in Item 7 and Note 1 to the
      financial statements of SOUTHERN under "Financial Instruments for Trading
      Activities" in Item 8 of the Form 10-K.

(E)   SOUTHERN's principal business segment -- or its traditional core business
      -- is the five regulated electric utility operating companies that provide
      electric service in four southeastern states. The other reportable
      business segment is non-traditional energy services provided by Southern
      Energy, which develops and manages electricity and other energy-related
      projects both in the United States and abroad. Intersegment revenues are
      not material. Financial data for business segments for the periods covered
      in the Form 10-Q are as follows:
<TABLE>
<CAPTION>



                                              Regulated
                                              Domestic             Southern Energy          All
                                              Electric        Non-Traditional Services     Other     Reconciling
                                              Utilities  International  Domestic  Total    (Note)    Eliminations  Consolidated
                                                                

                                              ------------ -------------------------------- --------- ------------- ---------------
    Three Months Ended March 31, 1999:                                      (in millions)
<S>                                            <C>          <C>        <C>        <C>         <C>         <C>           <C>     
      Operating revenues                       $ 1,882      $  461     $  61      $  522      $ 43        $   (5)       $  2,442
      Segment net income (loss)                    168          88         -          88       (33)            1             224
    Total assets at 3/31/99                     24,397       9,378     2,534      11,912     1,381        (2,252)         35,438
    ----------------------------------------- ------------ ---------- ---------- ---------- --------- ------------- ---------------

    Three Months Ended March 31, 1998:
      Operating revenues                        $ 1,954     $  475      $  33    $  508      $  35        $  (2)         $ 2,495
      Segment net income (loss)                     190         57          6        63         (3)          (8)             242
    Total assets at 12/31/98                     24,421      9,578      2,869    12,447      1,438        (2,114)         36,192
    ------------------------------------------ ----------- ----------- -------- ---------- --------- -------------- ---------------
</TABLE>

                                       67


<PAGE>



NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)


      (Note) The all other category includes parent SOUTHERN, which does not
      allocate operating expenses to business segments. Also, this category
      includes segments below the quantitative threshold for separate
      disclosure. These segments include a wireless communication company and a
      developmental company for energy products and services. Non-traditional
      services exclude interest expense to parent SOUTHERN.

(F)   Reference is made to Notes 3 and 7 to each of the registrant's financial
      statements, except SAVANNAH'S, in Item 8 of the Form 10-K for a discussion
      of the FERC orders in proceedings regarding the reasonableness of the
      return on common equity on certain of the Southern electric system's
      wholesale rate schedules and contracts and a discussion of the long-term
      power sales agreements. On April 19, 1999, the FERC entered an order
      dismissing the request for rehearing filed by customers under long-term
      power sales agreements. The parties are engaged in discussions with a view
      toward settlement of the proceedings which remain pending at FERC, but the
      ultimate outcome of these discussions cannot now be determined.


(G)   During the first three months of 1999, statutory business trusts, formed
      by ALABAMA and GEORGIA of which such companies own all the common
      securities, issued mandatorily redeemable preferred securities as follows:
      (in thousands)
<TABLE>
<CAPTION>

                                                                                                     Maturity Date
         Company                           Date of Issue       Amount        Rate        Notes          of Notes

<S>                                             <C>  >        <C>         <C>           <C>              <C> 
         ALABAMA                                2/25/99         $50,000   Auction         $51,550        2/28/2029
         GEORGIA                                2/25/99        $200,000      6.85%       $206,186        3/31/2029
</TABLE>

      Substantially all the assets of each trust are junior subordinated notes
      issued by the related company in the respective approximate principal
      amounts set forth above. ALABAMA and GEORGIA consider that the mechanisms
      and obligations relating to the preferred securities issued for its
      benefit, taken together, constitute a full and unconditional guarantee by
      it of the respective trusts' payment obligations with respect to the
      preferred securities.

(H)   Reference is made to Note 3 to the financial statements of SOUTHERN and 
      ALABAMA in Item 8 of the Form 10-K for information relating to retail 
      rate adjustment procedures.

(I)   Reference is made to Note 3 to the financial statements of SOUTHERN and
      ALABAMA in Item 8 of the Form 10-K for information relating to a judgment
      against ALABAMA arising from discharges into Lake Martin. The trial court
      has denied the defendants' motion for a new trial and for remittitur, and
      ALABAMA has appealed to the Supreme Court of Alabama.

(J)   In 1996, legal actions against ALABAMA were filed in several counties in
      Alabama charging ALABAMA with fraud and non-compliance with regulatory
      statutes relating to the offer, sale and financing of "extended service
      contracts" in connection with the sale of electric appliances. See Note 3
      to the financial statements of SOUTHERN and ALABAMA in Item 8 of the Form
      10-K for additional information.


                                       68
<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)



(K)   Reference is made to Note 3 to the financial statements of SOUTHERN and
      GEORGIA in Item 8 of the Form 10-K for information concerning a three-year
      rate order approved by the Georgia PSC effective January 1, 1999. The
      order decreased annual retail rates by $262 million effective January 1,
      1999 and by an additional $24 million effective January 1, 2000. The order
      further provides for $85 million each year, plus up to $50 million
      annually of any earnings in excess of a 12.5% retail return on common
      equity during the second and third years, to be applied to accelerated
      amortization or depreciation of assets. Two-thirds of any additional
      earnings in excess of the 12.5% return will be applied to rate reductions
      and the remaining one-third retained by GEORGIA.

(L)   Reference is made to Note 3 to the financial statements of SOUTHERN and
      GEORGIA in Item 8 of the Form 10-K for information regarding GEORGIA's
      designation as a potentially responsible party under the Comprehensive
      Environmental Response, Compensation and Liability Act and other
      environmental contingencies.

(M)  In September  1998,  OPC decreased its purchases of capacity  under a power
     supply agreement by 250 megawatts,  resulting in a $16 million reduction in
     1999 revenues.  Under the amended 1995 Integrated Resource Plan approved by
     the Georgia PSC in March 1997, the resources  associated with the decreased
     purchases  in 1998  will be used to meet  the  needs  of  GEORGIA's  retail
     customers  through 2004. As a result of additional  reduction notices given
     by OPC  under its  agreement  with  GEORGIA,  GEORGIA's  capacity  revenues
     received from OPC were estimated to decrease by an additional $7 million in
     1999, $18 million in 2000 and $4 million in 2001.  Effective April 1, 1999,
     GEORGIA and OPC entered  into a new  agreement  which will delay,  in part,
     planned  purchase  reductions by OPC. The new agreement has been filed with
     the FERC under SOUTHERN's market-based rate authority.  Based on the above,
     GEORGIA's capacity revenues received from OPC are now estimated to decrease
     by  approximately $6 million in 1999, $15 million in 2000 and $7 million in
     2001.

(N)   Reference is made to Note 3 to the financial statements of SAVANNAH in
      Item 8 of the Form 10-K for information concerning the four-year
      accounting order approved by the Georgia PSC in June 1998.

(O)  Reference is made to Note 3 to the financial statements of SOUTHERN in Item
     8 and to  Legal  Proceedings  in Item 3 of the Form  10-K  for  information
     relating to petitions for Chapter 11 bankruptcy  relief which were filed in
     the U. S. Bankruptcy Court for the Southern District of Alabama.  Effective
     with the bankruptcy  filing in January 1999, Mobile Energy is accounted for
     under  the  equity  method,  rather  than  being  consolidated  as  before.
     SOUTHERN's  equity investment in Mobile Energy was $56 million at March 31,
     1999. At March 31, 1999, Mobile Energy had total assets of $372 million and
     senior debt  outstanding  of $203 million of first  mortgage  bonds and $77
     million   related  to  tax-exempt   bonds.  In  connection  with  the  bond
     financings,  SOUTHERN  provided  certain  limited  guarantees,  in  lieu of
     funding debt service and maintenance  reserve  accounts with cash. In March
     1999,  under an agreement with the  bondholders,  SOUTHERN paid $36,144,000
     pursuant to the guarantees.  The bondholders  reserved the right to seek an
     additional $2,700,000,  which SOUTHERN believes was satisfied by an earlier
     transfer  of funds.  The  ultimate  outcome  of this  matter  cannot now be
     determined.

(P)   In 1998, SOUTHERN's Board of Directors authorized SOUTHERN to make open
      market purchases of its common stock in an aggregate amount not to exceed
      $300 million through March 31, 1999. The purpose of the program was to
      provide shares of common stock for the purchase requirements of SOUTHERN's
      various stockholder, employee and outside director stock purchase plans.
      Under the program, 41,000 shares were sold in the quarter ended March 31,
      1999.

                                       69

<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)



      Also, in April 1999, SOUTHERN's board approved the repurchase of up to 50
      million shares of SOUTHERN's common stock over the next two years through
      open market or privately negotiated transactions. The program does not
      establish a target stock price or timetable for specific repurchases.
      Under this program, 4,116,800 shares have been repurchased through May 12,
      1999, with funding provided from SOUTHERN's commercial paper program.


                                       70

<PAGE>


PART II       -  OTHER INFORMATION


Item 1.          Legal Proceedings.


           (1)    Reference is made to the Notes to the Condensed Financial
                  Statements herein for information regarding certain legal and
                  administrative proceedings in which SOUTHERN and its reporting
                  subsidiaries are involved.


Item 6.          Exhibits and Reports on Form 8-K.
<TABLE>
<CAPTION>

                  <S>   <C>
                 (a)    Exhibits.

                        Exhibits 15   -   Letter re: unaudited interim financial information
                                          (a)      ALABAMA
                                          (b)      GEORGIA

                        Exhibit 24    -   Powers of Attorney and resolutions.  (Designated in the Form 10-K for the year ended
                                          December 31, 1998, File Nos. 1-3526, 1-3164, 1-6468, 0-2429, 0-6849 and 1-5072 as
                                          Exhibits 24(a), 24(b), 24(c), 24(d), 24(e) and 24(f), respectively, and incorporated
                                          herein by reference.)

                        Exhibits 27   -   Financial Data Schedule
                                          (a)    SOUTHERN
                                          (b)    ALABAMA
                                          (c)    GEORGIA
                                          (d)    GULF
                                          (e)    MISSISSIPPI
                                          (f)    SAVANNAH

                 (b) Reports on Form 8-K.

                        SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI AND
                        SAVANNAH each filed a Current Report on Form 8-K dated
                        February 10, 1999:
                              Item reported:                  Item 7
                              Financial statements filed:
                                                              Each registrant's
                                                              audited financial
                                                              statements for the
                                                              year ended
                                                              December 31, 1998.

                        ALABAMA filed a Current Report on Form 8-K dated February 18, 1999:
                              Items reported:                 Item 5
                                                              Item 7
                              Financial statements filed:     None

</TABLE>


                                       71
<PAGE>


PART II       -  OTHER INFORMATION

Item 6.          Exhibits and Reports on Form 8-K.

                 (b)    Reports on Form 8-K. (Continued)

                        GEORGIA filed Current Reports on Form 8-K dated February
                        17, 1999 and March 3, 1999:
                              Items reported:                 Item 5
                                                              Item 7
                              Financial statements filed:     None




                                       72

<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.

          THE SOUTHERN COMPANY

     By   A. W. Dahlberg
          Chairman, President and Chief Executive Officer
          (Principal Executive Officer)

     By   W. L. Westbrook
          Financial Vice President, Chief Financial Officer and Treasurer
          (Principal Financial and Accounting Officer)

     By   /s/ Wayne Boston                     
          (Wayne Boston, Attorney-in-fact)

                                                     Date:  May 13, 1999

------------------------------------------------------------------------------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.

          ALABAMA POWER COMPANY

     By   Elmer B. Harris
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   William B. Hutchins, III
          Executive Vice President, Chief Financial Officer and Treasurer
          (Principal Financial Officer)

     By   /s/ Wayne Boston                     
          (Wayne Boston, Attorney-in-fact)

                                                       Date:  May 13, 1999

                                       73
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.

          GEORGIA POWER COMPANY

     By   H. Allen Franklin
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   David M. Ratcliffe
          Executive Vice President, Treasurer and Chief Financial Officer
          (Principal Financial Officer)

     By   /s/ Wayne Boston                     
          (Wayne Boston, Attorney-in-fact)


                                                        Date:  May 13, 1999

------------------------------------------------------------------------------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.

          GULF POWER COMPANY

     By   Travis J. Bowden
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   A. E. Scarbrough
          Vice President - Finance
          (Principal Financial and Accounting Officer)

     By   /s/ Wayne Boston                     
          (Wayne Boston, Attorney-in-fact)


                                                       Date:  May 13, 1999

                                       74
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.

          MISSISSIPPI POWER COMPANY

     By   Dwight H. Evans
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   Michael W. Southern
          Vice President, Secretary, Treasurer and Chief Financial Officer
          (Principal Financial and Accounting Officer)

     By   /s/ Wayne Boston                     
          (Wayne Boston, Attorney-in-fact)


                                                        Date:  May 13, 1999

-----------------------------------------------------------------------------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.

          SAVANNAH ELECTRIC AND POWER COMPANY

     By   G. Edison Holland,  Jr.
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   Kirby R. Willis
          Vice President, Treasurer and Chief Financial Officer
          (Principal Financial and Accounting Officer)

     By   /s/ Wayne Boston                     
          (Wayne Boston, Attorney-in-fact)

                                                        Date:  May 13, 1999



                                       75