===============================================================================
                                  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, 2003
                                       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
                     (850) 444-6111
001-11229            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
333-98553            Southern Power Company                    58-2598670
                     (A Delaware Corporation)
                     270 Peachtree Street, N.W.
                     Atlanta, Georgia 30303
                     (404) 506-5000
==================== ========================================= ================


<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____

     Indicate by check mark whether the registrants are accelerated filers as
defined by Rule 12b-2 of the Securities Exchange Act of 1934.
Yes X (except for Southern Power Company)  No ___

<TABLE>
<CAPTION>


                                                        Description of                        Shares Outstanding
Registrant                                               Common Stock                          at April 30, 2003

<S>                                                                <C>                                  <C>
The Southern Company                                     Par Value $5 Per Share                         721,737,312
Alabama Power Company                                    Par Value $40 Per Share                          6,312,500
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
Southern Power Company                                   Par Value $0.01 Per Share                            1,000
</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, Savannah Electric and Power Company and Southern 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.


                                       2
<PAGE>


                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                                 March 31, 2003
<TABLE>
<CAPTION>
                                                                                                                               Page
                                                                                                                             Number
<S>                                                                                                                            <C>
DEFINITIONS...............................................................................................................     5
                         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........................................................            8
                Condensed Consolidated Statements of Cash Flows....................................................            9
                Condensed Consolidated Balance Sheets..............................................................           10
                Condensed Consolidated Statements of Comprehensive Income and
                    Accumulated Other Comprehensive Income.........................................................           12
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           13
             Alabama Power Company
                Condensed Statements of Income.....................................................................           22
                Condensed Statements of Cash Flows.................................................................           23
                Condensed Balance Sheets...........................................................................           24
                Condensed Statements of Comprehensive Income and
                    Accumulated Other Comprehensive Income.........................................................           26
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           27
             Georgia Power Company
                Condensed Statements of Income.....................................................................           35
                Condensed Statements of Cash Flows.................................................................           36
                Condensed Balance Sheets...........................................................................           37
                Condensed Statements of Comprehensive Income and
                    Accumulated Other Comprehensive Income.........................................................           39
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           40
             Gulf Power Company
                Condensed Statements of Income.....................................................................           48
                Condensed Statements of Cash Flows.................................................................           49
                Condensed Balance Sheets...........................................................................           50
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           52
             Mississippi Power Company
                Condensed Statements of Income.....................................................................           59
                Condensed Statements of Cash Flows.................................................................           60
                Condensed Balance Sheets...........................................................................           61
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           63
             Savannah Electric and Power Company
                Condensed Statements of Income.....................................................................           71
                Condensed Statements of Cash Flows.................................................................           72
                Condensed Balance Sheets...........................................................................           73
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           75
             Southern Power Company
                Condensed Statements of Income.....................................................................           82
                Condensed Statements of Cash Flows.................................................................           83
                Condensed Balance Sheets...........................................................................           84
                Condensed Statements of Comprehensive Income and
                    Accumulated Other Comprehensive Income.........................................................           86
                Management's Discussion and Analysis of Results of Operations and Financial Condition..............           87
             Notes to the Condensed Financial Statements...........................................................           94
Item 3.      Quantitative and Qualitative Disclosures about Market Risk............................................           20
Item 4.      Controls and Procedures...............................................................................           20

</TABLE>
                                       3
<PAGE>


                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                                 March 31, 2003
<TABLE>
<CAPTION>

                                                                                                                             Number
                           PART II - OTHER INFORMATION

<S>                                                                                                                          <C>
Item 1.  Legal Proceedings.........................................................................................          102
Item 2.  Changes in Securities and Use of Proceeds................................................................. 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..........................................................................          102
         Signatures and Certifications.............................................................................          106

</TABLE>
                                       4
<PAGE>



                                   DEFINITIONS
<TABLE>
<CAPTION>

TERM                                             MEANING
<S>                                              <C>
Alabama Power...............................     Alabama Power Company
Clean Air Act ..............................     Clean Air Act Amendments of 1990
Dynegy......................................     Dynegy, Inc.
ECO Plan....................................     Environmental Compliance Overview Plan
Energy Act..................................     Energy Policy Act of 1992
EPA.........................................     U. S. Environmental Protection Agency
FASB........................................     Financial Accounting Standards Board
FERC........................................     Federal Energy Regulatory Commission
Form 10-K...................................     Combined Annual Report on Form 10-K of Southern Company,
                                                 Alabama Power, Georgia Power, Gulf Power, Mississippi Power,
                                                 Savannah Electric and Southern Power for the year ended
                                                 December 31, 2002
Georgia Power...............................     Georgia Power Company
Gulf Power..................................     Gulf Power Company
IRS.........................................     Internal Revenue Service
Mirant......................................     Mirant Corporation
Mississippi Power...........................     Mississippi Power Company
Mobile Energy...............................     Mobile Energy Services Company, L.L.C. and
                                                 Mobile Energy Services Holdings, Inc.
Moody's.....................................     Moody's Investors Service, Inc.
operating companies.........................     Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric
PEP.........................................     Performance Evaluation Plan
PPA.........................................     Purchase Power Agreement
PSC.........................................     Public Service Commission
RTO.........................................     Regional Transmission Organization
S&P.........................................     Standard and Poor's, a division of The McGraw-Hill Companies
Savannah Electric...........................     Savannah Electric and Power Company
SCS.........................................     Southern Company Services, Inc.
SEC.........................................     Securities and Exchange Commission
SeTrans.....................................     A proposed regional transmission organization consisting
                                                 of public and private companies, including Southern Company, located
                                                 in eight southeastern states
Southern Company............................     The Southern Company
Southern Company GAS........................     Southern Company Gas LLC
Southern Power..............................     Southern Power Company
Southern Company system.....................     Southern Company, the operating companies, Southern Power and other subsidiaries
Super Southeast.............................     Southern Company's traditional service territory, Alabama, Florida, Georgia and
                                                 Mississippi plus the surrounding states of Kentucky, Louisiana, North Carolina,
                                                 South Carolina, Tennessee and Virginia
TVA.........................................     Tennessee Valley Authority

</TABLE>

                                       5

<PAGE>


           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     This Quarterly Report on Form 10-Q contains forward-looking and historical
information. Forward-looking information includes, among other things,
statements concerning the strategic goals for Southern Company's wholesale
business, estimated construction expenditures and Southern Company's projections
for energy sales and its goals for future generating capacity, dividend payout
ratio, equity ratio, earnings per share and earnings growth. In some cases,
forward-looking statements can be identified by terminology such as "may,"
"will," "could," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "projects," "predicts," "potential" or "continue" or the negative
of these terms or other comparable terminology. 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 the impact of recent and future federal and state regulatory
change, including legislative and regulatory initiatives regarding deregulation
and restructuring of the electric utility industry and also changes in
environmental and other laws and regulations to which Southern Company and its
subsidiaries are subject, as well as changes in application of existing laws and
regulations; current and future litigation, including the pending EPA civil
actions against certain Southern Company subsidiaries; the effects, extent and
timing of the entry of additional competition in the markets in which Southern
Company's subsidiaries operate; the impact of fluctuations in commodity prices,
interest rates and customer demand; state and federal rate regulations;
political, legal and economic conditions and developments in the United States;
the performance of projects undertaken by the non-traditional business and the
success of efforts to invest in and develop new opportunities; internal
restructuring or other restructuring options that may be pursued; potential
business strategies, including acquisitions or dispositions of assets or
businesses, which cannot be assured to be completed or beneficial to Southern
Company or its subsidiaries; the ability of counterparties of Southern Company
and its subsidiaries to make payments as and when due; the effects of, and
changes in, economic conditions in the areas in which Southern Company's
subsidiaries operate, including the current soft economy; the direct or indirect
effects on Southern Company's business resulting from the terrorist incidents on
September 11, 2001, or any similar such incidents or responses to such
incidents; financial market conditions and the results of financing efforts; the
timing and acceptance of Southern Company's new product and service offerings;
the ability of Southern Company and its subsidiaries to obtain additional
generating capacity at competitive prices; weather and other natural phenomena;
and other factors discussed elsewhere herein and in other reports (including the
Form 10-K) filed from time to time with the SEC.


                                       6
<PAGE>


                              THE SOUTHERN COMPANY
                            AND SUBSIDIARY COMPANIES















                                       7

<PAGE>

<TABLE>
<CAPTION>
                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
            CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


                                                                                    For the Three Months
                                                                                        Ended March 31,
                                                                                 2003                  2002
-------------------------------------------------------------------------------------------------------------------
                                                                                         (in thousands)
Operating Revenues:
<S>                                                                             <C>                   <C>
Retail sales                                                                    $1,973,844            $1,843,719
Sales for resale                                                                   339,161               232,679
Other electric revenues                                                             91,877                63,417
Other revenues                                                                     148,020                73,773
-------------------------------------------------------------------------------------------------------------------
Total operating revenues                                                         2,552,902             2,213,588
-------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Fuel                                                                               710,327               574,193
Purchased power                                                                    137,102                67,617
Other operations                                                                   493,866               445,252
Maintenance                                                                        229,710               228,790
Depreciation and amortization                                                      244,988               245,635
Taxes other than income taxes                                                      148,826               139,847
-------------------------------------------------------------------------------------------------------------------
Total operating expenses                                                         1,964,819             1,701,334
-------------------------------------------------------------------------------------------------------------------
Operating Income                                                                   588,083               512,254
Other Income and (Expense):
Allowance for equity funds used during construction                                  7,851                 7,087
Interest income                                                                      4,498                 4,803
Equity in losses of unconsolidated subsidiaries                                    (27,167)              (15,904)
Leveraged lease income                                                              17,715                14,701
Interest expense, net of amounts capitalized                                      (123,761)             (120,553)
Distributions on capital and preferred securities of subsidiaries                  (39,586)              (42,527)
Preferred dividends of subsidiaries                                                 (4,750)               (4,381)
Other income (expense), net                                                         (4,283)              (20,056)
-------------------------------------------------------------------------------------------------------------------
Total other income and (expense)                                                  (169,483)             (176,830)
-------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes                                                       418,600               335,424
-------------------------------------------------------------------------------------------------------------------
Income taxes                                                                       121,168               111,138
-------------------------------------------------------------------------------------------------------------------
Earnings Before Cumulative Effect of Accounting Change                             297,432               224,286
-------------------------------------------------------------------------------------------------------------------
Cumulative effect of accounting change --
   less income taxes of $231                                                           367                     -
-------------------------------------------------------------------------------------------------------------------
Consolidated Net Income                                                           $297,799              $224,286
-------------------------------------------------------------------------==================-=====================--
Common Stock Data:
   Consolidated basic earnings per share                                             $0.41                 $0.32
   Consolidated diluted earnings per share                                           $0.41                 $0.32
Average number of basic shares of common
stock outstanding (in thousands)                                                   718,943               701,012
Average number of diluted shares of common
stock outstanding (in thousands)                                                   724,891               706,298
Cash dividends paid per share of common stock                                       $0.343                $0.335
</TABLE>

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



                                                8

<PAGE>
<TABLE>
<CAPTION>

                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                                                                   For the Three Months
                                                                                      Ended March 31,
                                                                                  2003               2002
----------------------------------------------------------------------------------------------------------------------------
                                                                                      (in thousands)
Operating Activities:
<S>                                                                                  <C>               <C>
Consolidated net income                                                              $297,799          $224,286
Adjustments to reconcile consolidated net income
 to net cash provided from operating activities --
Depreciation and amortization                                                         289,200           274,523
Deferred income taxes and investment tax credits                                       80,005           (15,910)
Equity in losses of unconsolidated subsidiaries                                        27,167            15,904
Leveraged lease income                                                                (17,715)          (14,701)
Pension, postretirement, and other employee benefits                                    3,646            (6,345)
Other, net                                                                             19,177            30,119
Changes in certain current assets and liabilities --
Receivables, net                                                                      181,153           197,256
Fossil fuel stock                                                                       6,831              (235)
Materials and supplies                                                                 (8,709)            6,779
Other current assets                                                                 (127,995)         (103,221)
Accounts payable                                                                     (203,267)         (144,435)
Taxes accrued                                                                          (8,628)           32,884
Other current liabilities                                                            (178,548)          (52,516)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities                                           360,116           444,388
----------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions                                                             (535,379)         (677,550)
Cost of removal net of salvage                                                          2,253           (28,147)
Other                                                                                 (67,531)          (74,894)
----------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                               (600,657)         (780,591)
----------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Increase (decrease) in notes payable, net                                             533,363           (85,020)
Proceeds --
Senior notes                                                                        1,085,000           125,000
Other long-term debt                                                                   19,870           718,119
Capital and preferred securities                                                            -            35,000
Preferred stock                                                                       125,000                 -
Common stock                                                                          121,661           125,882
Redemptions --
First mortgage bonds                                                                  (33,350)           (6,794)
Long-term senior notes                                                               (875,905)         (380,615)
Other long-term debt                                                                 (390,513)          (16,607)
Capital and preferred securities                                                      (40,000)                -
Payment of common stock dividends                                                    (245,745)         (234,272)
Other                                                                                 (22,455)           (2,419)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from financing activities                                           276,926           278,274
----------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents                                                36,385           (57,929)
----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning of Period                                      273,010           354,015
----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                          $ 309,395         $ 296,086
------------------------------------------------------------------------------================-=================------------
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of $18,066 and $12,269 capitalized for 2003 and 2002, respectively)    $117,458           $82,315
Income taxes (net of refunds)                                                           ($117)          $58,204



      The accompanying notes as they relate to Southern Company are an integral part of these condensed financial statements.
</TABLE>
                                      9

<PAGE>
<TABLE>
<CAPTION>

                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                                         At March 31,           At December 31,
Assets                                                                       2003                    2002
------------------------------------------------------------------------------------------------------------------
                                                                                               (in thousands)
Current Assets:
<S>                                                                             <C>                    <C>
Cash and cash equivalents                                                       $ 309,395              $ 273,032
Receivables
Customer accounts receivable                                                      657,622                709,878
Unbilled revenues                                                                 215,754                277,105
Under recovered regulatory clause revenues                                       154,757                 174,362
Other accounts and notes receivable                                               356,392                370,021
Accumulated provision for uncollectible accounts                                  (30,798)               (25,546)
Fossil fuel stock, at average cost                                                292,124                298,955
Materials and supplies, at average cost                                           548,168                539,459
Other                                                                             418,202                349,936
------------------------------------------------------------------------------------------------------------------
Total current assets                                                            2,921,616              2,967,202
------------------------------------------------------------------------------------------------------------------
Property, Plant, and Equipment:
In service                                                                     38,308,286             37,485,853
Less accumulated depreciation                                                  15,044,427             15,448,850
                                                                               23,263,859             22,037,003
Nuclear fuel, at amortized cost                                                   202,240                222,676
Construction work in progress                                                   2,225,239              2,382,287
------------------------------------------------------------------------------------------------------------------
Total property, plant, and equipment                                           25,691,338             24,641,966
------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Nuclear decommissioning trusts, at fair value                                     654,980                639,167
Leveraged leases                                                                  791,190                790,767
Other                                                                             223,683                243,353
------------------------------------------------------------------------------------------------------------------
Total other property and investments                                            1,669,853              1,673,287
------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes                                          894,336                897,777
Prepaid pension costs                                                             813,752                786,115
Unamortized debt issuance expense                                                 129,359                121,008
Unamortized premium on reacquired debt                                            325,426                313,057
Other                                                                             404,744                398,581
------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets                                         2,567,617              2,516,538
------------------------------------------------------------------------------------------------------------------
Total Assets                                                                  $32,850,424            $31,798,993
----------------------------------------------------------------------====================----===================-

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




                                         10

<PAGE>
<TABLE>
<CAPTION>

                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


                                                                      At March 31,           At December 31,
Liabilities and Stockholders' Equity                                      2003                    2002
----------------------------------------------------------------------------------------------------------------
                                                                                            (in thousands)
Current Liabilities:
<S>                                                                        <C>                    <C>
Securities due within one year                                             $ 1,440,623            $ 1,679,489
Notes payable                                                                1,541,527                972,459
Accounts payable                                                               717,949                985,660
Customer deposits                                                              173,552                168,952
Taxes accrued --
Income taxes                                                                   117,405                112,765
Other                                                                          127,686                218,967
Interest accrued                                                               163,209                158,196
Vacation pay accrued                                                           127,648                130,015
Other                                                                          412,477                592,530
----------------------------------------------------------------------------------------------------------------
Total current liabilities                                                    4,822,076              5,019,033
----------------------------------------------------------------------------------------------------------------
Long-term debt                                                               8,703,516              8,692,962
----------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes                                            4,305,410              4,214,471
Deferred credits related to income taxes                                       442,976                449,816
Accumulated deferred investment tax credits                                    599,926                606,779
Employee benefits provisions                                                   634,955                614,239
Asset retirement obligations                                                   791,154                      -
Other                                                                          876,458                813,464
----------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities                                 7,650,879              6,698,769
----------------------------------------------------------------------------------------------------------------
Company or subsidiary obligated mandatorily redeemable
capital and preferred securities                                             2,380,000              2,380,000
----------------------------------------------------------------------------------------------------------------

Cumulative preferred stock of subsidiaries                                     423,126                298,126
----------------------------------------------------------------------------------------------------------------
Common Stockholders' Equity:
Common stock, par value $5 per share --
Authorized -- 1 billion shares
Issued   -- March 31, 2003: 721,108,761 shares;
 -- December 31, 2002:  716,548,526 shares                                   3,605,544              3,582,743
Paid-in capital                                                                436,610                337,670
Treasury, at cost -- March 31, 2003: 151,582 shares;
  -- December 31, 2002:  147,021 shares                                         (3,121)                (2,815)
Retained earnings                                                            4,921,636              4,874,375
Accumulated other comprehensive loss                                           (89,842)               (81,870)
----------------------------------------------------------------------------------------------------------------
Total common stockholders' equity                                            8,870,827              8,710,103
----------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity                                 $32,850,424            $31,798,993
-------------------------------------------------------------------====================----===================--

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

</TABLE>



                                         11

<PAGE>

<TABLE>
<CAPTION>

                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
      CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


                                                                                            For the Three Months
                                                                                               Ended March 31,
------------------------------------------------------------------------------------------------------------------------
                                                                                         2003                    2002
------------------------------------------------------------------------------------------------------------------------
                                                                                                (in thousands)
<S>                                                                                    <C>                    <C>
Consolidated Net Income                                                                $ 297,799              $ 224,286
Other comprehensive income (loss):
Changes in fair value of marketable securities                                               112                   (140)
Changes in fair value of qualifying hedges, net of tax of                                 (8,341)                 6,249
   $(5,504) and $4,045, respectively
Less:  Reclassification adjustment for amounts included in net                               257                      -
   income, net of tax of $166
-------------------------------------------------------------------------------------------------------------------------
Total other comprehensive income (loss)                                                 $ (7,972)               $ 6,109
-------------------------------------------------------------------------------------------------------------------------

CONSOLIDATED COMPREHENSIVE INCOME                                                      $ 289,827              $ 230,395
=========================================================================================================================


</TABLE>

<TABLE>
<CAPTION>




                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
   CONDENSED CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS
                                  (UNAUDITED)



                                    At March 31,           At December 31,
                                        2003                    2002
--------------------------------------------------------------------------
                                              (in thousands)

<S>                                 <C>                      <C>
Balance at beginning of period      $ (81,870)               $ 7,148
Change in current period               (7,972)               (89,018)
-------------------------------------------------------------------------
BALANCE AT END OF PERIOD            $ (89,842)             $ (81,870)
-------------------------------------------------------------------------





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



</TABLE>


                                               12

<PAGE>


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

                   FIRST QUARTER 2003 vs. FIRST QUARTER 2002


RESULTS OF OPERATIONS

Southern Company is focusing on three main businesses in
the Southeast: its traditional business, represented by its five operating
companies providing regulated retail electric service in four states; a growing
competitive generation business in the Super Southeast; and energy-related
products and services for its retail customers. For additional information on
these businesses, see Item 1 - BUSINESS - "Operating Companies," "Southern
Power" and "Other Business" in the Form 10-K.

Earnings

Southern Company's first quarter 2003 earnings were $298 million ($0.41
per share) compared with $224 million ($0.32 per share) in the first quarter
2002. The increase in earnings for the first quarter 2003 is due to a number of
positive factors, including increased demand for electricity, continued customer
growth, solid performance by the competitive generation business and the overall
impact of regulatory rate proceedings in Alabama and Florida, partially offset
by the impact of higher operating expenses related to generating units that were
placed in service in 2002. Lower than normal temperatures in the first quarter
2003 resulted in increased demand for energy when compared to the corresponding
period in 2002.

    Significant income statement items appropriate for discussion include the
following:

                                                 Increase (Decrease)
                                         -------------------------------------
                                                    First Quarter
                                         -------------------------------------
                                             (in thousands)          %
Retail sales..........................       $130,125                7.1
Sales for resale......................        106,482               45.8
Other electric revenues...............         28,460               44.9
Other revenues........................         74,247              100.6
Fuel expense..........................        136,134               23.7
Purchased power expense...............         69,485              102.8
Other operation expense...............         48,614               10.9
Equity in losses of unconsolidated
   subsidiaries.......................         11,263               70.8
Leveraged lease income................          3,014               20.5
Other income (expense), net...........         15,773               78.6

         Retail sales. Excluding fuel revenues, which generally do not affect
net income, retail sales revenue was up by $57.5 million, or 4.4%, in the first
quarter 2003 when compared to the corresponding period in the prior year. Energy
sales to residential, commercial and industrial customers for the first quarter
2003 increased by 4.3%, 1.1% and 4.0%, respectively, as compared to the same
reporting period in 2002. Colder weather and customer growth significantly
impacted energy sales to these customers in the first quarter 2003 when compared
to the same period in the prior year.



                                       13
<PAGE>


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

     Sales for resale. During the first quarter 2003, sales for resale increased
due to increases in both the demand and price of energy sold when compared to
the same period in 2002.

     Other electric revenues. During the first quarter 2003, other electric
revenues increased primarily due to higher revenue from cogeneration steam
facilities resulting from higher gas prices and demand, increased revenues from
transmission to others and higher fees charged for connection, reconnection and
collection. Since cogeneration steam revenues are generally offset by fuel
expenses, these revenues do not have a significant impact on earnings.

     Other revenues. For the first quarter 2003, other revenues increased
primarily due to revenues from Southern Company GAS, which began operations in
August 2002.

     Fuel expense. The increase in fuel expense for the first quarter 2003 can
be primarily attributed to fuel expenses at Southern Company GAS, increased
generation to meet higher demand, the commercial operation of Southern Power's
Plant Franklin Unit 1 and Plant Wansley Units 6 and 7 in June 2002, and an
increase of over 100% in the unit cost for natural gas.

     Purchased power expense. The increase in purchased power expense during the
first quarter 2003 was mainly the result of higher demand for energy and
increased prices for these energy purchases when compared to the corresponding
period in 2002.

     Other operations expense. During the first quarter 2003, the increase in
other operations expense is attributed to a number of factors. Primary factors
include higher administrative and general expenses, higher transmission and
distribution expenses and expenses at Southern Company GAS, which began
operations in August 2002.

     Equity in losses of subsidiaries. The increase in losses from
unconsolidated subsidiaries in the first quarter 2003 as compared to the same
period in 2002 related to higher operating losses from Southern Company's
investments in alternative fuel partnerships. These losses are offset by income
tax credits generated by such partnerships.

     Leveraged lease income. In the first quarter 2003, leveraged lease income
increased mainly due to the effect of a new lease transaction involving a
coal-fired electric generation facility in Mississippi that Southern Company
completed in late December 2002.

     Other income (expense), net. The increase in this item during the first
quarter 2003 when compared to the same period in 2002 is primarily due to mark
to market adjustments for derivative electric contracts, a decrease in
non-utility expenses at Alabama Power and higher income associated with a new
electricity pricing program at Georgia Power.

                                       14
<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. The two major factors are the ability of the operating companies to
maintain a stable regulatory environment and achieve energy sales growth while
containing costs and the profitability of the competitive market-based wholesale
generating business. For additional information relating to these issues, see
Item 1 - BUSINESS - "Risk Factors" and Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Future Earnings Potential" of Southern Company in the Form 10-K.

   Reference is made to Note 11 to the financial statements of Southern Company
in Item 8 and MANAGEMENT'S DISCUSSION AND ANALYSIS-"Future Earnings Potential"
in Item 7 of the Form 10-K and to Note (B) to the Condensed Financial Statements
herein for information relating to the spin-off of Mirant from Southern Company.
Mirant recently filed its Annual Report on Form 10-K for the year ended December
31, 2002, which included its restated financial statements for the years ended
December 31, 2001 and 2000. The effect of these restatements on Southern
Company's financial statements, if any, cannot be determined until Mirant's 2001
revised quarterly financial statements are filed. However, Southern Company's
management does not currently anticipate that a reaudit of Southern Company's
2000 or 2001 financial statements will be necessary.

     Southern Company's business activities are subject to extensive
governmental regulation related to public health and the environment. Litigation
over environmental issues and claims of various types, including property
damage, personal injury and citizen enforcement of environmental requirements,
has increased generally throughout the United States. In particular, personal
injury claims for damages caused by alleged exposure to hazardous materials have
become more frequent. The ultimate outcome of such litigation currently filed
against Southern Company and its subsidiaries cannot be predicted at this time;
however, after consultation with legal counsel, management does not anticipate
that the liabilities, if any, arising from such proceedings would have a
material adverse effect on Southern Company's financial position, results of
operations or cash flows.

     Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be recovered. For additional information about the Clean Air Act
and other environmental issues, including the EPA litigation, see Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" and Note 3 to the
financial statements of Southern Company in Item 8 of the Form 10-K. On May 7,
2003, the U.S. District Court in Alabama extended the stay of the EPA litigation
proceeding in Alabama until the earlier of August 5, 2003 or a ruling by the
U.S. Court of Appeals for the Eleventh Circuit in the related litigation
involving TVA.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential - FERC Matters" of Southern Company in the Form 10-K
for information on the formation of an RTO as ordered by the FERC and the notice
of proposed rulemaking regarding open access transmission service and standard
electricity market design. In April 2003, the FERC issued a White Paper related
to its proposed rulemaking regarding open access transmission service and
standard electricity market design in an effort to respond to certain of the
public comments received on the standard market design proposal. Evident in the
White Paper are continuing differences in opinion between the FERC and various
state regulatory commissions over questions of jurisdiction and protection of
retail customers. Pending energy legislation may also impact these issues. Any
impact of this proposal on Southern Company and its subsidiaries will depend on
the form in which final rules may be ultimately adopted; however, Southern
Company's revenues, expenses, assets and liabilities could be adversely affected
by changes in the transmission regulatory structure in its regional power
market.

                                       15
<PAGE>

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

     Reference is made to Note (J) to the Condensed Financial Statements herein
for information regarding the proposed terminations of three PPAs between
subsidiaries of Dynegy and Mississippi Power and Southern Power. Reference is
also made to Notes (C) through (G) to the Condensed Financial Statements herein
for discussion of various contingencies and other matters which may affect
future earnings potential.

Accounting Policies

Critical Policy

Southern Company's significant accounting policies are described in Note 1 to
the financial statements of Southern Company in Item 8 of the Form 10-K.
Southern Company's only critical accounting policy involves rate regulation. The
operating companies 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 regulatory assets and liabilities
that are not specifically recoverable and determine if any other assets,
including plant, have been impaired.

New Accounting Standards

Reference is made to Note (H) to the Condensed Financial Statements herein for
information regarding the adoption of FASB Statement No. 143, "Accounting for
Asset Retirement Obligations" effective January 1, 2003. Statement No. 143
establishes new accounting and reporting standards for legal obligations
associated with the ultimate cost of retiring long-lived assets. The present
value of the ultimate costs for an asset's future retirement must be recorded in
the period in which the liability is incurred. The cost must be capitalized as
part of the related long-lived asset and depreciated over the asset's useful
life. Additionally, Statement No. 143 does not permit non-regulated companies to
continue accruing future retirement costs for long-lived assets that they do not
have a legal obligation to retire. Prior to January 2003, Southern Company
accrued for the ultimate cost of retiring most long-lived assets over the life
of the related asset through depreciation expense.


FINANCIAL CONDITION

Overview

Major changes in Southern Company's financial condition during the first three
months of 2003 included $535 million used for gross property additions to
utility plant. The funds for these additions and other capital requirements were
primarily obtained from issuances of senior notes and other long-term debt. See
Southern Company's Condensed Consolidated Statements of Cash Flows herein for
further details.

Off-Balance Sheet Financing Arrangements

Reference is made to Note 9 to the financial statements of Southern Company in
Item 8 of the Form 10-K and Note 8 to the financial statements of Mississippi
Power in Item 8 of the Form 10-K for information regarding Mississippi Power's
lease agreement with Escatawpa Funding, Limited Partnership ("Escatawpa"). Under
this agreement, Escatawpa, a special purpose entity, is the owner-lessor of the
combined-cycle generating units at Mississippi Power's Plant Daniel.

                                       16
<PAGE>


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


     Mississippi Power is currently working to restructure this agreement so
that it will continue to be accounted for as an operating lease. The
restructured agreement should be completed in June 2003, prior to the required
implementation date of FASB Interpretation No. 46, "Consolidation of Certain
Special-Purpose Entities." If the agreement is not restructured, Interpretation
No. 46 will require that Mississippi Power consolidate the assets and
liabilities of Escatawpa effective July 1, 2003.

Credit Rating Risk

Southern Company and its subsidiaries do not have any credit agreements that
would require material changes in payment schedules or terminations as a result
of a credit rating downgrade. There are certain contracts that could require
collateral -- but not accelerated payment -- in the event of a credit rating
change to below investment grade. These contracts are primarily for physical
electricity sales, fixed-price physical gas purchases and agreements covering
interest rate swaps. At March 31, 2003, the maximum potential collateral
requirements under the electricity sale contracts and financial instrument
agreements were approximately $425 million. Generally, collateral may be
provided for by a Southern Company guaranty, letter of credit or cash. At March
31, 2003, there were no material collateral requirements for the gas purchase
contracts.

Exposure to Market Risks

Southern Company's market risk exposures relative to interest rate changes have
not changed materially compared with the December 31, 2002 reporting period. In
addition, Southern Company is not aware of any facts or circumstances that would
significantly affect such exposures in the near term.

     Due to cost-based rate regulations, the operating companies have limited
exposure to market volatility in interest rates, commodity fuel prices and
prices of electricity. To mitigate residual risks relative to movements in
electricity prices, the operating companies and Southern Power enter into fixed
price contracts for the purchase and sale of electricity through the wholesale
electricity market and, to a lesser extent, similar contracts for gas purchases.
Also, the operating companies have each implemented fuel-hedging programs at the
instruction of their respective PSCs. The fair value of derivative energy
contracts at March 31, 2003 was as follows:

                                                   First Quarter
                                                        2003
                                                      Changes
      --------------------------------------- -------------------------
                                                     Fair Value
     --------------------------------------- -------------------------
                                                   (in thousands)
     Contracts beginning of period                   $47,335
     Contracts realized or settled                   (14,721)
     New contracts at inception                            -
     Changes in valuation techniques                       -
     Current period changes                           14,614
     --------------------------------------- -------------------------
     Contracts at March 31, 2003                     $47,228
     ======================================= =========================

                                       17

<PAGE>


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


                                                      Source of March 31, 2003
                                                           Valuation Prices
     -------------------------------- ------------ ----------------------------
                                          Total              Maturity
                                                   ----------------------------
                                      Fair Value      Year 1      1-3 Years
     -------------------------------- -----------------------------------------
                                                           (in millions)
     Actively quoted                        $47.2       $53.2       $(6.0)
     External sources                         -             -            -
     Models and other methods                 -             -            -
     -------------------------------- ------------ ----------------------------
     Contracts at March 31, 2003            $47.2       $53.2       $(6.0)
     ================================ ============ ============================

     Unrealized gains and losses from mark to market adjustments on contracts
related to the PSC-approved fuel hedging programs are recorded as regulatory
assets and liabilities. Realized gains and losses from these programs are
included in fuel expense and are recovered through the operating companies' fuel
cost recovery clauses. In addition, unrealized gains and losses on electric and
gas contracts used to hedge anticipated purchases and sales are deferred in
Other Comprehensive Income. Gains and losses on contracts that do not represent
hedges are recognized in the Statements of Income as incurred. At March 31,
2003, the fair value of derivative energy contracts reflected in the financial
statements was as follows:

                                                      Amounts
     --------------------------------------- -------------------------
                                                (in thousands)
     Regulatory liabilities, net                     $42,265
     Other comprehensive income                        4,011
     Net income                                          952
     --------------------------------------- -------------------------
     Total fair value                                $47,228
     ======================================= =========================

     For the quarters ended March 31, 2003 and 2002, approximately $0.5 million
and $9.8 million, respectively, of losses were recognized in income.

     Southern Company is exposed to market price risk in the event of
nonperformance by the parties to the derivative energy contracts. Southern
Company's policy is to enter into agreements with counterparties that have
investment grade credit ratings by Moody's and S&P; therefore Southern Company
does not anticipate nonperformance by the counterparties. For additional
information, reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS
- "Market Price Risk" of Southern Company in the Form 10-K, Note 1 to the
financial statements of Southern Company in Item 8 of the Form 10-K and Note (G)
to the Condensed Financial Statements herein.

Financing Activities

During the first quarter 2003, Southern Company subsidiaries issued $1,085
million of senior notes and $14 million of pollution control revenue bonds. The
issuances were used to refund $909 million of first mortgage bonds and long-term
senior notes. The remainder was used to reduce short-term debt and fund ongoing
construction programs. Reference is made to Southern Company's Condensed
Consolidated Statements of Cash Flows herein for further details on financing
activities during the first quarter 2003.

     The market price of Southern Company's common stock at March 31, 2003 was
$28.44 per share and the book value was $12.30 per share, representing a
market-to-book ratio of 231%, compared to $28.39, $12.16 and 233%, respectively,
at the end of 2002. The dividend for the first quarter 2003 was $0.3425 per
share compared to $0.335 per share in the first quarter of 2002.

                                       18
<PAGE>


                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                     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 - "Capital
Requirements for Construction," "Other Capital Requirements" and "Environmental
Matters" of Southern Company in the Form 10-K for a description of the Southern
Company system's capital requirements for its construction program, sinking fund
requirements, maturing debt and environmental compliance efforts. Approximately
$1.4 billion will be required by March 31, 2004 for redemptions and maturities
of long-term debt. Also, Southern Company and its subsidiaries plan to continue,
to the extent possible, a program to retire higher-cost debt and replace these
securities with lower-cost capital.

Sources of Capital

In addition to the financing activities previously described, Southern Company
may require additional equity capital over the next several years. The amounts
and timing of additional equity capital to be raised will be contingent on
Southern Company's investment opportunities. The operating companies and
Southern Power plan to obtain the funds required for construction and other
purposes from sources similar to those used in the past, which were primarily
internal sources and the issuances of new debt and preferred equity securities,
term loans and short-term borrowings. However, the amount, type and timing of
any financings -- if needed -- will depend upon market conditions and regulatory
approval. See Item 1 - BUSINESS - "Financing Programs" of Southern Company in
the Form 10-K for additional information.

     Southern Company's current liabilities exceed current assets because of the
continued use of short-term debt as a funding source to meet cash needs as well
as scheduled maturities of long-term debt.

     To meet short-term cash needs and contingencies, the Southern Company
system had at March 31, 2003 approximately $309 million of cash and cash
equivalents and approximately $4.2 billion of unused credit arrangements with
banks, of which $2.9 billion expire in 2003 and $1.25 billion expire in 2004 and
beyond. Of the facilities maturing in 2003, $2.7 billion contain provisions
allowing two-year term loans executable at the expiration date. These unused
credit arrangements also provide liquidity support to variable rate pollution
control bonds and commercial paper programs. Due to a reduction of commercial
paper and variable rate pollution bonds requiring liquidity support, the
Southern Company system plans to reduce its credit arrangements to $3.5 billion
by the end of June 2003. The operating companies may also meet short-term cash
needs through a Southern Company subsidiary organized to issue and sell
commercial paper and extendible commercial notes at the request and for the
benefit of each of the operating companies. At March 31, 2003, the Southern
Company system had extendible commercial notes outstanding of $19.9 million,
short-term notes payable outstanding of $20 million and commercial paper
outstanding of $1.46 billion. Management believes that the need for working
capital can be adequately met by utilizing lines of credit without maintaining
large cash balances.

                                       19

<PAGE>



PART I

Item 3.       Quantitative And Qualitative Disclosures About Market Risk.

Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS - "Market Price Risk"
herein for each registrant and Note 1 to the financial statements of each
registrant in Item 8 of the Form 10-K. Reference is also made to Note (I) to the
Condensed Financial Statements herein for information relating to derivative
instruments.

Item 4.       Controls and Procedures.

(a)      Evaluation of disclosure controls and procedures.

Within 90 days of the filing date of this quarterly report, Southern Company,
the operating companies and Southern Power conducted separate evaluations under
the supervision and with the participation of each company's management,
including the Chief Executive Officer and the Chief Financial Officer, of the
effectiveness of the design and operation of the disclosure controls and
procedures (as defined in Sections 13a-14(c) and 15d-14(c) of the Securities
Exchange Act of 1934). Based upon those evaluations, the Chief Executive Officer
and the Chief Financial Officer, in each case, concluded that the disclosure
controls and procedures are effective in alerting them in a timely manner to
material information relating to each company (including its consolidated
subsidiaries) required to be included in periodic filings with the SEC.

(b)      Changes in internal controls.

There have been no significant changes in Southern Company's, the operating
companies' or Southern Power's internal controls or in other factors that could
significantly affect these internal controls subsequent to the date each company
carried out its evaluation.


                                       20
<PAGE>



                              ALABAMA POWER COMPANY


                                       21

<PAGE>
<TABLE>
<CAPTION>

                              ALABAMA POWER COMPANY
                   CONDENSED STATEMENTS OF INCOME (UNAUDITED)


                                                                                     For the Three Months
                                                                                       Ended March 31,
                                                                                     2003             2002
----------------------------------------------------------------------------------------------------------------
                                                                                           (in thousands)
Operating Revenues:
<S>                                                                                    <C>             <C>
Retail sales                                                                           $670,829        $631,897
Sales for resale --
Non-affiliates                                                                          123,722          94,623
Affiliates                                                                               61,987          54,677
Other revenues                                                                           38,023          21,052
----------------------------------------------------------------------------------------------------------------
Total operating revenues                                                                894,561         802,249
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel                                                                                    239,744         210,297
Purchased power --
Non-affiliates                                                                           33,270          15,771
Affiliates                                                                               41,496          32,730
Other                                                                                   134,543         120,062
Maintenance                                                                              74,575          76,814
Depreciation and amortization                                                           100,211          98,275
Taxes other than income taxes                                                            60,085          57,500
----------------------------------------------------------------------------------------------------------------
Total operating expenses                                                                683,924         611,449
----------------------------------------------------------------------------------------------------------------
Operating Income                                                                        210,637         190,800
Other Income and (Expense):
Allowance for equity funds used during construction                                       4,737           3,007
Interest income                                                                           3,276           3,162
Interest expense, net of amounts capitalized                                            (54,573)        (55,649)
Distributions on preferred securities of subsidiary                                      (3,441)         (6,019)
Other income (expense), net                                                              (5,719)        (11,565)
----------------------------------------------------------------------------------------------------------------
Total other income and (expense)                                                        (55,720)        (67,064)
----------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes                                                            154,917         123,736
Income taxes                                                                             59,073          47,540
----------------------------------------------------------------------------------------------------------------
Net Income                                                                               95,844          76,196
Dividends on Preferred Stock                                                              4,025           3,656
----------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock                                          $ 91,819        $ 72,540
-------------------------------------------------------------------------------=================-===============





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

</TABLE>

                                                   22
<PAGE>
<TABLE>
<CAPTION>

                                                     ALABAMA POWER COMPANY
                                         CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                                                                        For the Three Months
                                                                                                          Ended March 31,
                                                                                                         2003           2002
                                                                                                    --------------- -------------
                                                                                                           (in thousands)
Operating Activities:
<S>                                                                                                       <C>            <C>
Net income                                                                                                $ 95,844       $76,196
Adjustments to reconcile net income
 to net cash provided from operating activities --
Depreciation and amortization                                                                              117,031       116,006
Deferred income taxes and investment tax credits, net                                                       14,105       (16,543)
Pension, postretirement, and other employee benefits                                                        (4,201)       (5,848)
Other, net                                                                                                   9,111        24,605
Changes in certain current assets and liabilities --
Receivables, net                                                                                            62,811        20,098
Fossil fuel stock                                                                                           (3,949)        4,351
Materials and supplies                                                                                      (2,087)        1,403
Other current assets                                                                                       (61,415)      (63,522)
Accounts payable                                                                                          (106,583)      (67,620)
Taxes accrued                                                                                               60,108        60,256
Other current liabilities                                                                                  (13,860)       48,988
                                                                                                    --------------- -------------
Net cash provided from operating activities                                                                166,915       198,370
                                                                                                    --------------- -------------
Investing Activities:
Gross property additions                                                                                  (189,839)     (173,817)
Cost of removal net of salvage                                                                              10,865       (10,865)
Other                                                                                                      (12,928)       11,098
                                                                                                    --------------- -------------
Net cash used for investing activities                                                                    (191,902)     (173,584)
                                                                                                    --------------- -------------
Financing Activities:
Increase (decrease) in notes payable, net                                                                  (36,991)       86,837
Proceeds --
Senior notes                                                                                               620,000             -
Preferred stock                                                                                            125,000             -
Capital contributions from parent company                                                                    4,195         1,468
Redemptions --
First mortgage bonds                                                                                             -        (4,498)
Senior notes                                                                                              (560,800)         (364)
Other long-term debt                                                                                          (236)         (216)
Payment of preferred stock dividends                                                                        (3,200)       (3,632)
Payment of common stock dividends                                                                         (107,550)     (107,750)
Other                                                                                                       (9,513)         (194)
                                                                                                    --------------- -------------
Net cash provided from (used for) financing activities                                                      30,905       (28,349)
                                                                                                    --------------- -------------
Net Change in Cash and Cash Equivalents                                                                      5,918        (3,563)
Cash and Cash Equivalents at Beginning of Period                                                            22,685        35,756
                                                                                                    --------------- -------------
Cash and Cash Equivalents at End of Period                                                                $ 28,603       $32,193
                                                                                                    =============== =============
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of $2,507 and $1,939 capitalized for 2003 and 2002, respectively)                            $31,313       $28,030
Income taxes (net of refunds)                                                                                  $ -       $23,097



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

                                        23
<PAGE>
<TABLE>
<CAPTION>

                                                       ALABAMA POWER COMPANY
                                               CONDENSED BALANCE SHEETS (UNAUDITED)


                                                                                            At March 31,          At December 31,
Assets                                                                                          2003                   2002
                                                                                        ---------------------   --------------------
                                                                                                                  (in thousands)
Current Assets:
<S>                                                                                                 <C>                    <C>
Cash and cash equivalents                                                                           $ 28,603               $ 22,685
Receivables --
Customer accounts receivable                                                                         227,139                240,052
Unbilled revenues                                                                                     69,906                 89,336
Other accounts and notes receivable                                                                   38,598                 47,535
Affiliated companies                                                                                  52,569                 74,099
Accumulated provision for uncollectible accounts                                                      (5,229)                (4,827)
Fossil fuel stock, at average cost                                                                    77,692                 73,742
Materials and supplies, at average cost                                                              189,683                187,596
Other                                                                                                168,830                110,035
                                                                                        ---------------------   --------------------
Total current assets                                                                                 847,791                840,253
                                                                                        ---------------------   --------------------
Property, Plant, and Equipment:
In service                                                                                        13,662,507             13,506,170
Less accumulated provision for depreciation                                                        5,327,380              5,543,416
                                                                                        ---------------------   --------------------
                                                                                                   8,335,127              7,962,754
Nuclear fuel, at amortized cost                                                                       92,993                103,088
Construction work in progress                                                                        564,672                478,652
                                                                                        ---------------------   --------------------
Total property, plant, and equipment                                                               8,992,792              8,544,494
                                                                                        ---------------------   --------------------
Other Property and Investments:
Equity investments in subsidiaries                                                                    45,916                 45,553
Nuclear decommissioning trusts                                                                       300,072                292,297
Other                                                                                                 16,406                 16,477
                                                                                        ---------------------   --------------------
Total other property and investments                                                                 362,394                354,327
                                                                                        ---------------------   --------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes                                                             327,651                327,276
Prepaid pension costs                                                                                402,781                389,793
Unamortized debt issuance expense                                                                      9,703                  4,361
Unamortized premium on reacquired debt                                                               112,466                103,819
Department of Energy assessments                                                                      17,144                 17,144
Other                                                                                                 99,365                104,539
                                                                                        ---------------------   --------------------
Total deferred charges and other assets                                                              969,110                946,932
                                                                                        ---------------------   --------------------
Total Assets                                                                                    $ 11,172,087           $ 10,686,006
                                                                                        =====================   ====================







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

                                         24

<PAGE>
<TABLE>
<CAPTION>

                                                       ALABAMA POWER COMPANY
                                               CONDENSED BALANCE SHEETS (UNAUDITED)


                                                                                            At March 31,          At December 31,
Liabilities and Stockholder's Equity                                                            2003                   2002
                                                                                        ---------------------   --------------------
                                                                                                         (in thousands)
Current Liabilities:
<S>                                                                                                <C>                  <C>
Securities due within one year                                                                     $ 947,158            $ 1,117,945
Notes payable                                                                                              -                 36,991
Accounts payable --
Affiliated                                                                                            83,637                109,790
Other                                                                                                 70,670                150,195
Customer deposits                                                                                     45,322                 44,410
Taxes accrued --
Income taxes                                                                                         105,683                 80,438
Other                                                                                                 39,896                 20,561
Interest accrued                                                                                      58,630                 36,344
Vacation pay accrued                                                                                  33,901                 33,901
Other                                                                                                 81,274                114,870
                                                                                        ---------------------   --------------------
Total current liabilities                                                                          1,466,171              1,745,445
                                                                                        ---------------------   --------------------
Long-term debt                                                                                     3,089,659              2,851,562
                                                                                        ---------------------   --------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes                                                                  1,471,902              1,436,559
Deferred credits related to income taxes                                                             171,825                177,205
Accumulated deferred investment tax credits                                                          224,530                227,270
Employee benefits provisions                                                                         145,384                141,149
Deferred capacity revenues                                                                            31,578                 33,924
Asset retirement obligations                                                                         306,144                      -
Asset retirement obligation regulatory liability                                                      68,979                      -
Other                                                                                                158,915                147,640
                                                                                        ---------------------   --------------------
Total deferred credits and other liabilities                                                       2,579,257              2,163,747
                                                                                        ---------------------   --------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes                                                                                   300,000                300,000
                                                                                        ---------------------   --------------------
Cumulative preferred stock                                                                           372,512                247,512
                                                                                        ---------------------   --------------------
Common stockholder's equity:
Common stock, par value $40 per share --
Authorized  - 6,000,000 shares
Outstanding - 6,000,000 shares
Par value                                                                                            240,000                240,000
Paid-in capital                                                                                    1,904,660              1,900,464
Premium on preferred stock                                                                                99                     99
Retained earnings                                                                                  1,233,218              1,250,594
Accumulated other comprehensive loss                                                                 (13,489)               (13,417)
                                                                                        ---------------------   --------------------
Total common stockholder's equity                                                                  3,364,488              3,377,740
                                                                                        ---------------------   --------------------
Total Liabilities and Stockholder's Equity                                                      $ 11,172,087           $ 10,686,006
                                                                                        =====================   ====================





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

                                         25

<PAGE>
<TABLE>
<CAPTION>
                                ALABAMA POWER COMPANY
                           CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)



                                                                               For the Three Months
                                                                                  Ended March 31,
-----------------------------------------------------------------------------------------------------------
                                                                             2003                 2002
-----------------------------------------------------------------------------------------------------------
                                                                                      (in thousands)
<S>                                                                   <C>                  <C>
Net Income After Dividends on Preferred Stock                         $      91,819        $     72,540
-----------------------------------------------------------------------------------------------------------
Other comprehensive loss:
Changes in fair value of qualifying hedges, net of tax
of $(44)                                                                        (72)                 -
-----------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME                                                  $      91,747        $     72,540
---------------------------------------------------------------------================-----==============---

</TABLE>
<TABLE>
<CAPTION>





                              ALABAMA POWER COMPANY
    CONDENSED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS (UNAUDITED)




                                            At March 31,        At December 31,
                                                2003                 2002
-------------------------------------------------------------------------------
                                                      (in thousands)

<S>                                      <C>                  <C>
Balance at beginning of period           $    (13,417)        $          -
-------------------------------------------------------------------------------
Change in current period                          (72)             (13,417)
--------------------------------------------------------------------------------
BALANCE AT END OF PERIOD                 $    (13,489)        $    (13,417)
==============================================================================--


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




                                        26

<PAGE>



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

                    FIRST QUARTER 2003 vs. FIRST QUARTER 2002


RESULTS OF OPERATIONS

Earnings

Alabama Power's net income after dividends on preferred stock for the first
quarter 2003 was $91.8 million compared to $72.5 million for the corresponding
period of 2002. Earnings in the first quarter 2003 increased by $19.3 million or
26.6% primarily due to increases in territorial sales, retail rates and other
operating revenues. These increases in revenues were partially offset by
increased non-fuel operating expenses in the first quarter 2003 when compared to
the first quarter 2002.

     Significant income statement items appropriate for discussion include the
following:

                                                       Increase (Decrease)
                                               -------------------------------
                                                          First Quarter
                                               -------------------------------
                                                   (in thousands)          %
Retail sales................................        $38,932                6.2
Sales for resale - non-affiliates...........         29,099               30.8
Sales for resale - affiliates...............          7,310               13.4
Other revenues..............................         16,971               80.6
Fuel expense................................         29,447               14.0
Purchased power - non-affiliates............         17,499              111.0
Purchased power - affiliates................          8,766               26.8
Other operation expense.....................         14,481               12.1
Allowance for equity funds used during
 construction...............................          1,730               57.5
Distributions on preferred securities of
 subsidiary.................................         (2,578)             (42.8)
Other income (expense), net.................         (5,846)             (50.5)

         Retail sales. Excluding energy cost recovery revenues, which generally
do not affect net income, retail sales revenues were higher by $20.5 million, or
4.3%, for the first quarter 2003 when compared to the same period in 2002.
Energy sales to residential, commercial and industrial customers increased by
2.3%, 4.8% and 3.5%, respectively, for the first quarter 2003 when compared to
the corresponding period of 2002 primarily due to favorable weather conditions
and slight sales growth. A 2 percent increase in retail base rates, effective
April 2002, also increased retail sales revenues in the first quarter 2003.

     Sales for resale - non-affiliates. During the first quarter 2003, the
revenues associated with sales for resale - non-affiliates increased due to a
20.3% increase in energy sold and an 8.7% increase in price when compared to the
same period in 2002. Sales of energy will vary depending on demand, market based
prices and the availability of system generation.



                                       27
<PAGE>


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


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

     Other revenues. In the first quarter 2003, the increase in other revenues
is primarily attributed to an $8.5 million increase in revenues from
cogeneration steam facilities due to higher gas prices and demand, a $4.1
million increase in revenues from transmission to others and a $3.5 million
increase in revenues from higher fees charged to customers for connection,
reconnection and collection. Since cogeneration steam revenues are generally
offset by fuel expenses, these revenues do not have a significant impact on
earnings.

     Fuel expense. The increase in fuel expense during the first quarter 2003
when compared to the same period in 2002 was primarily attributed to a 6.7%
increase in generation to meet higher demand for energy and a 131.7% increase in
natural gas prices. Since energy expenses are generally offset by energy
revenues, these expenses did not have a significant impact on earnings.

     Purchased power - non-affiliates. In the first quarter 2003, purchased
power expense from non-affiliates increased due to a 139% increase in price even
though overall purchases of energy decreased 11.7% when compared to the
corresponding period in 2002. The purchase of energy decreased due to the
increased utilization of electricity within the Southern Company system with the
addition of 2,279 megawatts of generation placed into commercial operation
during 2002. These expenses do not have a significant impact on earnings since
energy expenses are generally offset by energy revenues through Alabama Power's
energy cost recovery clause.

     Other operation expense. The increase in other operation expense is mainly
a result of a $6.9 million increase in administrative and general expenses, a
$1.0 million increase in distribution expense, a $1.0 million increase in
customer accounts expense and a $1.0 million increase in sales expense during
the first quarter 2003 when compared to the corresponding period in 2002. The
increase in administrative and general expenses primarily relates to a $2.2
million increase in expense for property insurance and a $3.7 million increase
in employee benefits.

     Allowance for equity funds used during construction. During the first
quarter 2003, the allowance for equity funds used during construction increased
primarily due to the construction of selective catalytic reduction facilities at
Plant Miller.

     Distributions on preferred securities of subsidiary. During the first
quarter 2003, the decrease in distributions on preferred securities of
subsidiary is primarily attributed to the refinancing of higher distribution
rate trust preferred securities in the fourth quarter of 2002.

     Other income (expense), net. The decrease in other expense for the first
quarter 2003, when compared to the same period in 2002, is primarily due to a
$3.2 million increase in an unrealized gain relating to mark to market
adjustments for derivative electric contracts as required by FASB Statement No.
133 and a $1.8 million decrease in non-utility expenses when compared to the
corresponding period in the prior year. See "Exposure to Market Risks" herein
for additional information related to derivative energy contracts.

                                       28



<PAGE>


                              ALABAMA 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 including Alabama Power's ability to achieve energy sales growth while
containing costs and maintaining a stable regulatory environment. Growth in
energy sales is subject to a number of factors. These factors include weather,
competition, new short- and long-term contracts with neighboring utilities,
energy conservation practiced by customers, the elasticity of demand and the
rate of economic growth in Alabama Power's service area. For additional
information relating to these issues, see Item 1 - BUSINESS - "Risk Factors" and
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of
Alabama Power in the Form 10-K.

     Alabama Power's business activities are subject to extensive governmental
regulation related to public health and the environment. Litigation over
environmental issues and claims of various types, including property damage,
personal injury and citizen enforcement of environmental requirements, has
increased generally throughout the United States. In particular, personal injury
claims for damages caused by alleged exposure to hazardous materials have become
more frequent. Even though the potential for such litigation exists, the
possible outcome cannot be predicted at this time.

     Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot be recovered. For additional information about the Clean Air Act
and other environmental issues, including the EPA litigation, see Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" and Note 3 to the
financial statements of Alabama Power in Item 8 of the Form 10-K. On May 7,
2003, the U.S. District Court in Alabama extended the stay of the EPA litigation
proceeding in Alabama until the earlier of August 5, 2003 or a ruling by the
U.S. Court of Appeals for the Eleventh Circuit in the related litigation
involving TVA.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "FERC
Matters" of Alabama Power in the Form 10-K for information on the formation of
an RTO as ordered by the FERC and the notice of proposed rulemaking regarding
open access transmission service and standard electricity market design. In
April 2003, the FERC issued a White Paper related to its proposed rulemaking
regarding open access transmission service and standard electricity market
design in an effort to respond to certain of the public comments received on the
standard market design proposal. Evident in the White Paper are continuing
differences in opinion between the FERC and various state regulatory commissions
over questions of jurisdiction and protection of retail customers. Pending
energy legislation may also impact these issues. Any impact of this proposal on
Southern Company and its subsidiaries will depend on the form in which final
rules may be ultimately adopted; however, Alabama Power's revenues, expenses,
assets and liabilities could be adversely affected by changes in the
transmission regulatory structure in its regional power market.

     Reference is also made to Notes (A), (E), (F) and (I) to the Condensed
Financial Statements herein for discussion of various contingencies and other
matters which may affect future earnings potential.

                                       29

<PAGE>


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


Accounting Policies

Critical Policy

Alabama Power's significant accounting policies are described in Note 1 to the
financial statements of Alabama Power in Item 8 of the Form 10-K. Alabama
Power's only critical accounting policy involves rate regulation. Alabama Power
is 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 Alabama
Power's operations is no longer subject to these provisions, Alabama Power would
be required to write off related regulatory assets and liabilities that are not
specifically recoverable and determine if any other assets, including plant,
have been impaired.

New Accounting Standards

Reference is made to Note (H) to the Condensed Financial Statements herein for
information regarding the adoption of FASB Statement No. 143, "Accounting for
Asset Retirement Obligations" effective January 1, 2003. Statement No. 143
establishes new accounting and reporting standards for legal obligations
associated with the ultimate cost of retiring long-lived assets. The present
value of the ultimate costs for an asset's future retirement must be recorded in
the period in which the liability is incurred. The cost must be capitalized as
part of the related long-lived asset and depreciated over the asset's useful
life. Additionally, Statement No. 143 does not permit non-regulated companies to
continue accruing future retirement costs for long-lived assets that they do not
have a legal obligation to retire. Prior to January 2003, Alabama Power accrued
for the ultimate cost of retiring most long-lived assets over the life of the
related asset through depreciation expense.

     There was no cumulative effect to net income resulting from the adoption of
Statement No. 143. Alabama Power received an accounting order from the Alabama
PSC to defer the transition adjustment; therefore, Alabama Power recorded a
related regulatory liability of $71 million to reflect Alabama Power's
regulatory treatment of these costs under Statement No. 71. The initial
Statement No. 143 liability Alabama Power recognized was $301 million, of which
$310 million was reclassified from the accumulated depreciation reserve. The
amount capitalized to property, plant, and equipment was $63 million. Reference
is made to Note 1 to the financial statements of Alabama Power under "Regulatory
Assets and Liabilities" and "Depreciation and Nuclear Decommissioning" in Item 8
of the Form 10-K.

FINANCIAL CONDITION

Overview

Major changes in Alabama Power's financial condition during the first three
months of 2003 included the addition of approximately $190 million to utility
plant. The funds for these additions and other capital requirements were derived
primarily from operating activities. See Alabama Power's Condensed Statements of
Cash Flows herein for further details.

Credit Rating Risk

Alabama Power does not have any credit agreements that would require material
changes in payment schedules or terminations as a result of a credit rating
downgrade.

                                       30

<PAGE>


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


Exposure to Market Risks

Alabama Power's market risk exposures relative to interest rate changes have not
changed materially compared with the December 31, 2002 reporting period. In
addition, Alabama Power is not aware of any facts or circumstances that would
significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Alabama Power has limited exposure to
market volatility in interest rates, commodity fuel prices and prices of
electricity. To mitigate residual risks relative to movements in electricity
prices, Alabama Power enters into fixed price contracts for the purchase and
sale of electricity through the wholesale electricity market and, to a lesser
extent, similar contracts for gas purchases. Alabama Power has also implemented
a retail fuel hedging program at the instruction of the Alabama PSC. The fair
value of derivative energy contracts at March 31, 2003 was as follows:


                                                   First Quarter
                                                        2003
                                                      Changes
     --------------------------------------- -------------------------
                                                  Fair Value
     --------------------------------------- -------------------------
                                                (in thousands)
     Contracts beginning of period                   $21,402
     Contracts realized or settled                    (7,156)
     New contracts at inception                            -
     Changes in valuation techniques                       -
     Current period changes                           10,030
     --------------------------------------- -------------------------
     Contracts at March 31, 2003                     $24,276
     ======================================= =========================


                                                  Source of March 31, 2003
                                                      Valuation Prices
--------------------------------------- -------------------------------------
                                            Total              Maturity
                                                     ------------------------
                                        Fair Value      Year 1      1-3 Years
--------------------------------------- -------------------------------------
                                                         (in thousands)
Actively quoted                           $24,276       $29,076     $(4,800)
External sources                                -             -            -
Models and other methods                        -             -            -
--------------------------------------- ------------ ------------------------
Contracts at March 31, 2003               $24,276       $29,076     $(4,800)
======================================= ============ ========================

     Unrealized gains and losses from mark to market adjustments on contracts
related to the retail fuel hedging programs are recorded as regulatory assets
and liabilities. Realized gains and losses from these programs are included in
fuel expense and are recovered through Alabama Power's fuel cost recovery
clause. Gains and losses on contracts that do not represent hedges are
recognized in the Statements of Income as incurred. At

                                       31
<PAGE>


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


March 31, 2003, the fair value of derivative energy contracts reflected in the
financial statements was as follows:

                                                      Amounts
     --------------------------------------- -------------------------
                                                  (in thousands)
     Regulatory liabilities, net                     $24,386
     Other comprehensive income                            -
     Net loss                                           (110)
     --------------------------------------- -------------------------
     Total fair value                                $24,276
     ======================================= =========================

     For the quarters ended March 31, 2003 and 2002, approximately $0.2 million
and $3.4 million, respectively, of losses were recognized in income.

     For additional information, reference is made to Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Exposure to Market Risk" of Alabama Power in the Form
10-K and Note 1 to the financial statements of Alabama Power in Item 8 of the
Form 10-K and to Note (I) to the Condensed Financial Statements herein.

Financing Activities

In January 2003, Alabama Power redeemed $194 million of Series A 7 1/8% Senior
Notes due December 1, 2047 from proceeds obtained from Alabama Power's December
2002 issuance of $200 million Series S 5 7/8% Senior Notes due December 1, 2022.

     In February 2003, Alabama Power issued 1,250 shares ($125 million aggregate
stated capital) of Flexible Money Market Class A Preferred Stock (Series 2003A),
cumulative, par value $1 per share (stated capital $100,000 per share). The
proceeds from the sale were used to repay a portion of Alabama Power's
outstanding short-term indebtedness and for other general corporate purposes,
including Alabama Power's continuous construction program.

     Also in February 2003, Alabama Power issued $250 million in Series T 5.70%
Senior Notes due February 15, 2033. The proceeds from the sale were used to
redeem $200 million in aggregate principal amount of Series B 7% Senior
Quarterly Interest Notes due December 31, 2047 and for other general corporate
purposes, including Alabama Power's continuous construction program.

     Additionally, in February 2003, Alabama Power issued $170 million of Series
U 2.65% Senior Notes due February 15, 2006. The proceeds from the sale were used
to repay at maturity $167 million in aggregate principal amount of Series O
Floating Rate Senior Notes due March 3, 2003 and for other general corporate
purposes, including Alabama Power's continuous construction program.

     In March 2003, Alabama Power issued $200 million of Series V 5.60% Senior
Notes due March 15, 2033. The proceeds from the sale were used to redeem in
April 2003, $190 million in aggregate principal amount of Series C 7% Senior
Notes due March 31, 2048 and for other general corporate purposes, including
Alabama Power's continuous construction program.


                                       32
<PAGE>


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


     In April 2003, Alabama Power issued $195 million of Series W Floating Rate
Extendible Senior Notes due April 23, 2006, the initial maturity date, unless
the maturity of all or a portion of the principal amount is extended by
investors to April 23, 2007. The proceeds from the sale were used by Alabama
Power for general corporate purposes, including Alabama Power's continuous
construction program.

     After approval of an increase in authorized shares of common stock by
stockholders in April 2003, Alabama Power issued 312,500 shares of common stock
to Southern Company at $40.00 a share ($12,500,000 aggregate purchase price).
The proceeds from the sale will be used by Alabama Power for general corporate
purposes.

     In May 2003, Alabama Power issued $250 million of Series X 3.125% Senior
Notes due May 1, 2008. The proceeds from this sale will be used to repay at
maturity, in May 2003, $250 million in aggregate principal amount of the Series
M 7.85% Senior Notes due May 15, 2003.

     Alabama Power plans to continue, when economically feasible, a program to
retire higher-cost debt and replace these obligations with lower-cost capital if
market conditions permit. Capital RequirementsReference is made to Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS of Alabama Power under "Capital
Requirements," "Other Capital Requirements" and "Environmental Matters" in the
Form 10-K for a description of Alabama Power's capital requirements for its
construction program, maturing debt and environmental compliance efforts.Sources
of CapitalIn addition to the financing activities previously described herein,
Alabama Power 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.

     Alabama Power's current liabilities exceed current assets because of
scheduled maturities of long-term debt.

     To meet short-term cash needs and contingencies, Alabama Power had at March
31, 2003 approximately $28.6 million of cash and cash equivalents, unused
committed lines of credit of approximately $923 million (including $454 million
of such lines which are dedicated to funding purchase obligations relating to
variable rate pollution control bonds) and an extendible commercial note
program. Due to a reduction of commercial paper, Alabama Power plans to reduce
committed lines of credit to approximately $800 million in June 2003. Of these
lines of credit, unless extended, $533 million expire at various times in 2003
and $390 million expire in 2004. Alabama Power may also meet short-term cash
needs through a Southern Company subsidiary organized to issue and sell
commercial paper and extendible commercial notes at the request and for the
benefit of Alabama Power and other Southern Company subsidiaries. Alabama Power
has regulatory authority for up to $1.0 billion of short-term borrowings. At
March 31, 2003, Alabama Power had no outstanding commercial paper or 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.


                                       33
<PAGE>


                              GEORGIA POWER COMPANY




                                       34

<PAGE>
<TABLE>
<CAPTION>

                              GEORGIA POWER COMPANY
                   CONDENSED STATEMENTS OF INCOME (UNAUDITED)


                                                          For the Three Months
                                                            Ended March 31,
                                                          2003           2002
--------------------------------------------------------------------------------
                                                           (in thousands)
Operating Revenues:
<S>                                                    <C>          <C>
Retail sales                                           $ 965,707    $ 904,914
Sales for resale --
Non-affiliates                                            73,986       50,050
Affiliates                                                47,486       16,507
Other revenues                                            39,259       35,292
------------------------------------------------------------------------------
Total operating revenues                               1,126,438    1,006,763
------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel                                                     242,503      227,377
Purchased power --
Non-affiliates                                            72,036       37,790
Affiliates                                               113,843       58,780
Other                                                    185,990      173,820
Maintenance                                              110,944      103,854
Depreciation and amortization                             85,742       95,797
Taxes other than income taxes                             53,175       49,575
------------------------------------------------------------------------------
Total operating expenses                                 864,233      746,993
------------------------------------------------------------------------------
Operating Income                                         262,205      259,770
Other Income and (Expense):
Interest expense, net of amounts capitalized             (44,363)     (40,595)
Distributions on preferred securities of subsidiaries    (14,919)     (14,776)
Other income (expense), net                                5,983       (2,361)
------------------------------------------------------------------------------
Total other income and (expense)                         (53,299)     (57,732)
------------------------------------------------------------------------------
Earnings Before Income Taxes                             208,906      202,038
Income taxes                                              75,468       75,125
------------------------------------------------------------------------------
Net Income                                               133,438      126,913
Dividends on Preferred Stock                                 168          168
------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock          $ 133,270    $ 126,745
------------------------------------------------------===========-============


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

</TABLE>

                                35



<PAGE>
<TABLE>
<CAPTION>
                                                       GEORGIA POWER COMPANY
                                          CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                                                      For the Three Months
                                                                                         Ended March 31,
-----------------------------------------------------------------------------------------------------------------
                                                                                      2003             2002
-----------------------------------------------------------------------------------------------------------------
                                                                                         (in thousands)
Operating Activities:
<S>                                                                                     <C>            <C>
Net income                                                                              $133,438       $ 126,913
Adjustments to reconcile net income
 to net cash provided from operating activities --
Depreciation and amortization                                                            102,770          98,809
Deferred income taxes and investment tax credits, net                                     29,956          (1,817)
Pension, postretirement, and other employee benefits                                      (7,633)        (12,620)
Other, net                                                                                (8,924)           (213)
Changes in certain current assets and liabilities --
Receivables, net                                                                         114,048          56,234
Fossil fuel stock                                                                        (11,235)          1,609
Materials and supplies                                                                    (2,166)          2,925
Other current assets                                                                      24,309           7,506
Accounts payable                                                                        (189,719)        (74,888)
Taxes accrued                                                                            (56,058)        (16,490)
Other current liabilities                                                                    413          69,396
-----------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities                                              129,199         257,364
-----------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions                                                                (190,895)       (215,043)
Cost of removal net of salvage                                                            (4,950)        (10,793)
Sales of property                                                                              -         387,212
-----------------------------------------------------------------------------------------------------------------
Other                                                                                    (46,597)        (43,959)
-----------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) investing activities                                  (242,442)        117,417
-----------------------------------------------------------------------------------------------------------------
Financing Activities:
Increase in notes payable, net                                                           171,742         290,949
Proceeds --
Senior notes                                                                             400,000               -
Capital contributions from parent company                                                  2,750           2,984
Redemptions --
First mortgage bonds                                                                           -          (1,860)
Pollution control bonds                                                                        -          (7,800)
Senior notes                                                                            (315,000)       (300,000)
Capital distributions to parent company                                                        -        (200,000)
Payment of preferred stock dividends                                                        (175)           (182)
Payment of common stock dividends                                                       (141,450)       (135,725)
Other                                                                                     (8,196)         (1,318)
-----------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities                                   109,671        (352,952)
-----------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents                                                   (3,572)         21,829
Cash and Cash Equivalents at Beginning of Period                                          16,873          23,260
-----------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                              $ 13,301        $ 45,089
================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of $1,846 and $3,102 capitalized for 2003 and 2002, respectively)          $54,160         $30,324
Income taxes (net of refunds)                                                            ($3,896)        $24,021



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

</TABLE>


                                        36
<PAGE>
<TABLE>
<CAPTION>

                                                       GEORGIA POWER COMPANY
                                                CONDENSED BALANCE SHEETS (UNAUDITED)


                                                                             At March 31,             At December 31,
Assets                                                                           2003                      2002
------------------------------------------------------------------------------------------------------------------------
                                                                                           (in thousands)
Current Assets:
<S>                                                                                   <C>                      <C>
Cash and cash equivalents                                                             $ 13,301                 $ 16,873
Receivables --
Customer accounts receivable                                                           255,681                  302,995
Unbilled revenues                                                                       96,071                  104,454
Under recovered regulatory clause revenues                                             107,690                  117,580
Other accounts and notes receivable                                                     81,446                  122,585
Affiliated companies                                                                    24,838                   40,501
Accumulated provision for uncollectible accounts                                        (5,825)                  (5,825)
Fossil fuel stock, at average cost                                                     131,282                  120,048
Materials and supplies, at average cost                                                265,530                  263,364
Other                                                                                   69,728                   96,922
------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                 1,039,742                1,179,497
------------------------------------------------------------------------------------------------------------------------
Property, Plant, and Equipment:
In service                                                                          17,774,199               17,222,661
Less accumulated provision for depreciation                                          7,092,227                7,333,529
------------------------------------------------------------------------------------------------------------------------
                                                                                    10,681,972                9,889,132
Nuclear fuel, at amortized cost                                                        109,247                  119,588
Construction work in progress                                                          392,581                  667,581
------------------------------------------------------------------------------------------------------------------------
Total property, plant, and equipment                                                11,183,800               10,676,301
------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Equity investments in unconsolidated subsidiaries                                       35,881                   36,167
Nuclear decommissioning trusts                                                         354,907                  346,870
Other                                                                                   28,646                   28,612
------------------------------------------------------------------------------------------------------------------------
Total other property and investments                                                   419,434                  411,649
------------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes                                               521,230                  524,510
Prepaid pension costs                                                                  356,204                  341,944
Unamortized debt issuance expense                                                       70,017                   67,362
Unamortized premium on reacquired debt                                                 180,117                  178,590
Asset retirement obligation regulatory asset                                            26,475                        -
Other                                                                                  156,099                  162,686
------------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets                                              1,310,142                1,275,092
------------------------------------------------------------------------------------------------------------------------
Total Assets                                                                      $ 13,953,118             $ 13,542,539
--------------------------------------------------------------------------=====================----=====================





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

</TABLE>


                                       37
<PAGE>
<TABLE>
<CAPTION>


                              GEORGIA POWER COMPANY
                      CONDENSED BALANCE SHEETS (UNAUDITED)



                                                                           At March 31,             At December 31,
Liabilities and Stockholder's Equity                                           2003                      2002
----------------------------------------------------------------------------------------------------------------------
                                                                                                   (in thousands)
Current Liabilities:
<S>                                                                                <C>                      <C>
Securities due within one year                                                     $ 152,170                $ 322,125
Notes payable                                                                        529,419                  357,677
Accounts payable --
Affiliated                                                                            70,153                  135,260
Other                                                                                258,807                  445,220
Customer deposits                                                                     97,345                   94,859
Taxes accrued --
Income taxes                                                                          46,156                   20,245
Other                                                                                 52,300                  134,269
Interest accrued                                                                      60,719                   59,608
Vacation pay accrued                                                                  40,844                   42,442
Other                                                                                111,046                  112,131
----------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                          1,418,959                1,723,836
----------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                     3,364,047                3,109,619
----------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes                                                  2,194,992                2,176,438
Deferred credits related to income taxes                                             204,616                  208,410
Accumulated deferred investment tax credits                                          321,872                  324,994
Employee benefits provisions                                                         243,113                  236,486
Asset retirement obligations                                                         476,648                        -
Other                                                                                346,825                  373,740
----------------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities                                       3,788,066                3,320,068
----------------------------------------------------------------------------------------------------------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes                                                                   940,000                  940,000
----------------------------------------------------------------------------------------------------------------------
Preferred stock                                                                       14,569                   14,569
----------------------------------------------------------------------------------------------------------------------
Common Stockholder's Equity:
Common stock, without par value--
Authorized  - 15,000,000 shares
Outstanding  -  7,761,500 shares                                                     344,250                  344,250
----------------------------------------------------------------------------------------------------------------------
Paid-in capital                                                                    2,158,789                2,156,040
Premium on preferred stock                                                                40                       40
Retained earnings                                                                  1,937,340                1,945,520
Accumulated other comprehensive loss                                                 (12,942)                 (11,403)
----------------------------------------------------------------------------------------------------------------------
Total common stockholder's equity                                                  4,427,477                4,434,447
----------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity                                      $ 13,953,118             $ 13,542,539
-----------------------------------------------------------------------======================----=====================




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

</TABLE>

                                       38
<PAGE>
<TABLE>
<CAPTION>


                              GEORGIA POWER COMPANY
            CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


                                                                                                  For the Three Months
                                                                                                    Ended March 31,
---------------------------------------------------------------------------------------------------------------------------------
                                                                                              2003                     2002
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                      (in thousands)
<S>                                                                                    <C>                       <C>
Net Income After Dividends on Preferred Stock                                          $        133,270          $    126,745
Other comprehensive income (loss):
Changes in fair value of qualifying hedges, net of tax
of $(966) and $157, respectively                                                                 (1,532)                  248
Less:  Reclassification adjustment for amounts included in net income, net of tax                    (7)                    -
---------------------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME                                                                   $        131,731          $    126,993
--------------------------------------------------------------------------------------=====================-----=================

</TABLE>


<TABLE>
<CAPTION>

                              GEORGIA POWER COMPANY
    CONDENSED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS (UNAUDITED)



                                                         At March 31,            At December 31,
                                                               2003                     2002
------------------------------------------------------------------------------------------------------
                                                                         (in thousands)
<S>                                                     <C>                       <C>
Balance at beginning of period                          $         (11,403)        $          (153)
Change in current period                                           (1,539)                (11,250)
------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD                                $         (12,942)        $       (11,403)
-------------------------------------------------------=====================-----===================--






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


</TABLE>



                                            39

<PAGE>



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

                    FIRST QUARTER 2003 vs. FIRST QUARTER 2002

RESULTS OF OPERATIONS

EarningsGeorgia Power's net income after dividends on preferred stock for the
first quarter 2003 was $133.3 million compared to $126.7 million for the
corresponding period in 2002. Earnings in the first quarter 2003 increased by
$6.6 million, or 5.2%, primarily due to increased operating revenues which were
partially offset by increased non-fuel operating expenses.

     Significant income statement items appropriate for discussion include the
following:

                                                    Increase (Decrease)
                                            ---------------------------------
                                                       First Quarter
                                            ---------------------------------
                                                (in thousands)          %
Retail sales...........................          $60,793                6.7
Sales for resale - non-affiliates......           23,936               47.8
Sales for resale - affiliates..........           30,979              187.7
Fuel expense...........................           15,126                6.7
Purchased power - non-affiliates.......           34,246               90.6
Purchased power - affiliates...........           55,063               93.7
Other operation expense................           12,170                7.0
Maintenance expense....................            7,090                6.8
Depreciation and amortization..........          (10,055)             (10.5)
Other income (expense), net............            8,344              353.4

     Retail sales. Excluding fuel revenues, which generally do not affect net
income, retail sales revenue increased in the first quarter 2003 by $22.7
million, or 3.5%, when compared to the corresponding period in 2002. Colder
weather is the primary reason for the increase in retail sales revenues. Energy
sales to residential customers increased 7.6% in the first quarter 2003 when
compared to the same period in 2002. Energy sales to commercial customers
declined by 0.8%, while energy sales to the industrial sector rose by 5.1%,
compared to the first quarter 2002.

     Sales for resale - non-affiliates. Energy sales for resale to
non-affiliates increased 43.5% during the first quarter 2003 as a direct result
of increased demand for energy by these non-affiliates. These transactions did
not have a significant impact on earnings since the energy is usually sold at
variable cost.
     Sales for resale - affiliates. Revenues from sales for resale to affiliated
companies within the Southern Company system will vary depending on demand and
the availability and cost of generating resources at each company. Energy sales
increased 160.3% when compared to the first quarter 2002. These transactions did
not have a significant impact on earnings.

                                       40
<PAGE>


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


     Fuel expense. The first quarter 2003 increase is mainly due to increased
generation related to the higher demand for energy when compared to the same
period in the prior year and an increase of approximately 129% in the average
cost of natural gas. These expenses do not have a significant impact on earnings
since energy expenses are generally offset by energy revenues through Georgia
Power's fuel cost recovery clause.

     Purchased power - non-affiliates. In the first quarter 2003, purchased
power from non-affiliates increased primarily due to higher gas prices and an
18.2% increase in the demand for energy. These expenses do not have a
significant impact on earnings since energy expenses are generally offset by
energy revenues through Georgia Power's fuel cost recovery clause.

     Purchased power - affiliates. The increase in the first quarter 2003 is
principally attributed to the PPAs between Georgia Power and Southern Power
that began in June 2002. The capacity component of these transactions totaled
$23.6 million in the first quarter 2003. The energy component of power purchased
from affiliated companies within the Southern Company system will vary
depending on demand and the availability and cost of generating resources at
each company and will have no significant impact on earnings since energy
expenses are generally offset by energy revenues through Georgia Power's fuel
cost recovery clause.

     Other operation expense. During the first quarter 2003, other operation
expense increased from the same period in 2002 mainly due to increases of $3.2
million in transmission and distribution, $2.6 million in fossil power
generation, $1.7 million in customer accounting expenses and $2.1 million in
property insurance.

     Maintenance expense. In the first quarter 2003, maintenance expense was
higher than the amount recorded in the first quarter of 2002, principally due to
increased scheduled work on steam generating facilities and distribution
facilities.

     Depreciation and amortization. The decrease in this item for the first
quarter 2003 is primarily due to lower regulatory charges necessary to levelize
purchased power costs under the terms of the retail rate order effective January
1, 2002. The decrease is offset by an increase in purchased power costs
discussed above. All purchased power costs will be reflected in rates evenly
over the next three years under the retail rate order effective January 1, 2002.
     Other income (expense), net. The first quarter 2003 increase in this item
when compared to the same period in 2002 is partially the result of both higher
income associated with a new electricity pricing program and mark to market
adjustments for derivative energy contracts. See "Exposure to Market Risks"
herein for additional information related to derivative energy contracts.

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 the effect of weather and the economy
on energy sales. For additional information relating to these issues, see Item 1
- BUSINESS - "Risk Factors" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of Georgia Power in the Form 10-K.

                                       41
<PAGE>


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


     In January 2002, Georgia Power began operating under a three-year retail
rate order. Under the terms of the order, earnings will be evaluated annually
against a retail return on common equity range of 10 percent to 12.95 percent.
Two-thirds of any earnings above the 12.95 percent return will be applied to
rate refunds, with the remaining one-third retained by Georgia Power. Retail
rates were decreased by $118 million effective January 1, 2002. Reference is
made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings
Potential" and Note 3 to the financial statements of Georgia Power in Item 8 of
the Form 10-K for additional information.

     Beginning in June 2002, Georgia Power began purchases under PPAs with
Southern Power which will result in higher capacity and operating and
maintenance payments. Purchases under PPAs will be reflected in rates evenly
over the next three years under the retail rate order effective January 1, 2002.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential - FERC Matters" of Georgia Power in the Form 10-K for
information on the formation of an RTO as ordered by the FERC and the notice of
proposed rulemaking regarding open access transmission service and standard
electricity market design. In April 2003, the FERC issued a White Paper related
to its proposed rulemaking regarding open access transmission service and
standard electricity market design in an effort to respond to certain of the
public comments received on the standard market design proposal. Evident in the
White Paper are continuing differences in opinion between the FERC and various
state regulatory commissions over questions of jurisdiction and protection of
retail customers. Pending energy legislation may also impact these issues. Any
impact of this proposal on Southern Company and its subsidiaries will depend on
the form in which final rules may be ultimately adopted; however, Georgia
Power's revenues, expenses, assets and liabilities could be adversely affected
by changes in the transmission regulatory structure in its regional power
market.

     In June 2002, Georgia Power entered into a fifteen-year PPA beginning in
June 2005 with Southern Power to purchase 1,040 megawatts of capacity from the
planned combined-cycle plant at Plant McIntosh to be built and owned by Southern
Power. The annual capacity cost is expected to be approximately $72 million.
Reference is made to Note (L) to the Condensed Financial Statements for
information regarding the FERC approval process for this PPA.

     Additionally, Georgia Power has entered into a seven-year PPA beginning in
June 2005 with Duke Energy Trading & Marketing to purchase 620 megawatts with an
average annual capacity cost of approximately $48 million. Reference is made to
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" and
Note 4 under "Purchased Power Commitments" to the financial statements of
Georgia Power in Item 8 of the Form 10-K.

     Compliance costs related to the Clean Air Act and other environmental
issues could affect earnings if such costs cannot be recovered. For additional
information, including information on the EPA litigation, see Item 7 -
MANAGEMENT'S DISCUSSION AND Analysis - "Environmental Matters" of Georgia Power
and Note 3 to the financial statements of Georgia Power in Item 8 of the Form
10-K.


                                       42

<PAGE>


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


     Georgia Power's business activities are subject to extensive governmental
regulation related to public health and the environment. Litigation over
environmental issues and claims of various types, including property damage,
personal injury and citizen enforcement of environmental requirements, has
increased generally throughout the United States. In particular, personal injury
claims for damages caused by alleged exposure to hazardous materials have become
more frequent. The ultimate outcome of such litigation currently filed against
Georgia Power cannot be predicted at this time; however, after consultation with
legal counsel, management does not anticipate that the liabilities, if any,
arising from such proceedings would have a material adverse effect on Georgia
Power's financial statements.

     Reference is made to Notes (A), (E) through (G), (I), (K) and (L) to the
Condensed Financial Statements herein for discussion of various contingencies
and other matters which may affect future earnings potential.

Accounting Policies

Critical Policy

Georgia Power's significant accounting policies are described in Note 1 to the
financial statements of Georgia Power in Item 8 of the Form 10-K. Georgia
Power's only critical accounting policy involves rate regulation. Georgia Power
is 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 Georgia
Power's operations is no longer subject to these provisions,
Georgia Power would be required to write off related regulatory assets and
liabilities that are not specifically recoverable and determine if any other
assets, including plant, have been impaired.

New Accounting Standards

Reference is made to Note (H) to the Condensed Financial
Statements herein for information regarding the adoption of FASB Statement No.
143, "Accounting for Asset Retirement Obligations" effective January 1, 2003.
Statement No. 143 establishes new accounting and reporting standards for legal
obligations associated with the ultimate cost of retiring long-lived assets. The
present value of the ultimate costs for an asset's future retirement must be
recorded in the period in which the liability is incurred. The cost must be
capitalized as part of the related long-lived asset and depreciated over the
asset's useful life. Additionally, Statement No. 143 does not permit
non-regulated companies to continue accruing future retirement costs for
long-lived assets that they do not have a legal obligation to retire. Prior to
January 2003, Georgia Power accrued for the ultimate cost of retiring most
long-lived assets over the life of the related asset through depreciation
expense.

   There was no cumulative effect adjustment to net income resulting from the
adoption of Statement No. 143. Georgia Power received permission from the
Georgia PSC to defer the transition adjustment; therefore, Georgia Power
recorded a related regulatory asset of $21 million to reflect the regulatory
treatment of these costs under Statement No. 71 as of January 2003. The initial
Statement No. 143 liability Georgia Power recognized was $469 million, of which
$332 million was removed from the accumulated depreciation reserve. The amount
capitalized to property, plant, and equipment was $116 million.


                                       43

<PAGE>


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


FINANCIAL CONDITION

Overview

The major change in Georgia Power's financial condition during the first three
months of 2003 was the addition of  approximately $191 million to utility
plant. The funds for these additions and  other capital requirements were
derived primarily from operations. See Georgia Power's Condensed Statements of
Cash Flows herein for further details.

Credit Rating Risk

Georgia Power does not have any credit agreements that would require material
changes in payment schedules or terminations as a result of a credit rating
downgrade. There are certain physical electricity sales contracts that could
require collateral -- but not termination -- in the event of a credit rating
change to below investment grade. Generally, collateral may be provided for by a
Southern Company guaranty, letter of credit or cash. At March 31, 2003, the
maximum potential collateral requirements were approximately $228 million.

Exposure to Market Risks

Georgia Power's market risk exposures relative to interest rate changes have not
changed  materially  compared with the December 31, 2002  reporting  period.  In
addition,  Georgia Power is not aware of any facts or  circumstances  that would
significantly  affect such  exposures in the near term.  Due to cost-based  rate
regulations, Georgia Power has limited exposure to market volatility in interest
rates,  commodity fuel prices and prices of  electricity.  To mitigate  residual
risks  relative to movements in  electricity  prices,  Georgia Power enters into
fixed price  contracts  for the  purchase  and sale of  electricity  through the
wholesale electricity market and, to a lesser extent,  similar contracts for gas
purchases.  Georgia Power has also  implemented a retail fuel hedging program at
the  instruction  of the  Georgia  PSC.  The  fair  value of  derivative  energy
contracts at March 31, 2003 was as follows:

                                                   First Quarter
                                                        2003
                                                      Changes
     --------------------------------------- -------------------------
                                                     Fair Value
     --------------------------------------- -------------------------
                                                (in thousands)
     Contracts beginning of period                    $   89
     Contracts realized or settled                         -
     New contracts at inception                            -
     Changes in valuation techniques                       -
     Current period changes                             (928)
     --------------------------------------- -------------------------
     Contracts at March 31, 2003                       $(839)
     ======================================= =========================
     All of these contracts are actively quoted and mature within one year.


                                       44

<PAGE>


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


     At March 31, 2003, the fair value of derivative energy contracts reflected
in the financial statements was as follows:

                                                      Amounts
     --------------------------------------- -------------------------
                                                (in thousands)
     Regulatory assets, net                            $(705)
     Other comprehensive income                            -
     Net loss                                           (134)
     --------------------------------------- -------------------------
     Total fair value                                  $(839)
     ======================================= =========================

     Realized gains and losses are recognized in the Statements of Income as
incurred. For the quarters ended March 31, 2003 and 2002, approximately $0.2
million and $2.5 million, respectively, of losses were recognized in income.

     For additional information, reference is made to Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Exposure to Market Risks" of Georgia Power in the
Form 10-K and Note 1 to the financial statements of Georgia Power in Item 8 of
the Form 10-K.

Financing Activities

In February  2003,  Georgia  Power issued $250 million of Series L Floating
Rate Senior Notes due February 18, 2005.  The proceeds  from this  issuance were
used to repay a portion of Georgia Power's outstanding short-term  indebtedness.
Also in February  2003,  Georgia  Power  issued  $150  million of Series M 5.40%
Senior Insured Quarterly Notes due March 1, 2033. A portion of the proceeds were
used to redeem in March 2003 the $145 million  outstanding  principal  amount of
Georgia Power's Series A 6 7/8% Senior Public Income Notes due December 31, 2047
and the balance of the proceeds was used to repay a portion of Georgia  Power's
outstanding short-term indebtedness.


     During March 2003, Georgia Power elected to change the interest rate mode
on $316 million of variable rate pollution control bonds. Georgia Power changed
$255 million of the bonds from the "daily rate mode", which required backup bank
credit facilities, to the "auction rate mode." In addition, Georgia Power
changed $61 million of the bonds from the "daily rate mode" to the "long-term
interest rate mode."

     In April 2003, Georgia Power issued $100 million of Series N 5.750% Senior
Notes due April 15, 2023. The proceeds from this sale were used to repay a
portion of Georgia Power's outstanding short-term indebtedness. In addition, in
April 2003, Georgia Power issued $150 million of Series O 5.90% Senior Notes due
April 15, 2033. The proceeds from this sale were used to repay at maturity all
of Georgia Power's Series I 5.25% Senior Notes due May 8, 2003. Further, in
April 2003, Georgia Power issued $50 million of Series P Floating Rate Senior
Notes due April 15, 2005. The proceeds from this sale were used to repay a
portion of Georgia Power's outstanding short-term indebtedness.

     Georgia Power plans to continue, when economically feasible, a program to
retire higher-cost debt and replace these obligations with lower-cost capital if
market conditions permit.


                                       45
<PAGE>


                              GEORGIA 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 Georgia
Power under "Financing Activities", "Liquidity and Capital Requirements" and
"Environmental Matters" in the Form 10-K for a description of Georgia Power's
capital requirements for its construction program, maturing debt and
environmental compliance efforts.

Sources of Capital

Georgia Power 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.

     Georgia Power's current liabilities exceed current assets because of the
continued use of short-term debt as a funding source to meet cash needs.

     To meet short-term cash needs and contingencies, Georgia Power had at March
31, 2003 approximately $13.3 million of cash and cash equivalents and
approximately $1.175 billion of unused credit arrangements with banks. These
credit arrangements expire in 2003 and contain provisions allowing two-year term
loans executable at the expiration date. The credit arrangements provide
liquidity support to Georgia Power's obligations with respect to variable rate
pollution control bonds and commercial paper. Due to a reduction of commercial
paper and variable rate pollution control bonds requiring liquidity support as
outlined in "Financing Activities" above, Georgia Power plans to reduce its
credit arrangements to $700 million in June 2003. Georgia Power may also meet
short-term cash needs through a Southern Company subsidiary organized to issue
and sell commercial paper and extendible commercial notes at the request and for
the benefit of Georgia Power and other Southern Company subsidiaries. At March
31, 2003, Georgia Power had outstanding $521 million of commercial paper and
$7.9 million of extendible commercial notes. Management believes that the need
for working capital can be adequately met by utilizing lines of credit without
maintaining large cash balances.

                                       46
<PAGE>



                               GULF POWER COMPANY

                                       47

<PAGE>
<TABLE>
<CAPTION>

                               GULF POWER COMPANY
                   CONDENSED STATEMENTS OF INCOME (UNAUDITED)

                                                                                     For the Three Months
                                                                                       Ended March 31,
                                                                                     2003            2002
--------------------------------------------------------------------------------------------------------------
                                                                                               (in thousands)
Operating Revenues:
<S>                                                                                   <C>            <C>
Retail sales                                                                          $159,793       $133,494
Sales for resale --
Non-affiliates                                                                          18,725         17,434
Affiliates                                                                              10,217          2,581
Other revenues                                                                           9,103          7,424
--------------------------------------------------------------------------------------------------------------
Total operating revenues                                                               197,838        160,933
--------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel                                                                                    63,267         36,755
Purchased power --
Non-affiliates                                                                           5,956          5,804
Affiliates                                                                              12,587         17,061
Other                                                                                   30,011         26,925
Maintenance                                                                             16,580         18,189
Depreciation and amortization                                                           20,252         17,291
Taxes other than income taxes                                                           16,388         14,415
--------------------------------------------------------------------------------------------------------------
Total operating expenses                                                               165,041        136,440
--------------------------------------------------------------------------------------------------------------
Operating Income                                                                        32,797         24,493
Other Income and (Expense):
Allowance for equity funds used during construction                                         43          2,374
Interest expense, net of amounts capitalized                                            (8,055)        (6,986)
Distributions on preferred securities of subsidiary                                     (2,028)        (2,103)
Other income (expense), net                                                               (466)          (598)
--------------------------------------------------------------------------------------------------------------
Total other income and (expense)                                                       (10,506)        (7,313)
--------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes                                                            22,291         17,180
Income taxes                                                                             8,265          5,409
--------------------------------------------------------------------------------------------------------------
Net Income                                                                              14,026         11,771
Dividends on Preferred Stock                                                                54             54
--------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock                                         $ 13,972        $11,717
---------------------------------------------------------------------------------==============--=============



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


</TABLE>

                                48
<PAGE>
<TABLE>
<CAPTION>
                                                        GULF POWER COMPANY
                                          CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                                                    For the Three Months
                                                                                       Ended March 31,
                                                                                    2003             2002
---------------------------------------------------------------------------------------------------------------
                                                                                       (in thousands)
Operating Activities:
<S>                                                                                  <C>              <C>
Net income                                                                           $ 14,026         $ 11,771
Adjustments to reconcile net income
 to net cash provided from operating activities --
Depreciation and amortization                                                          21,589           18,474
Deferred income taxes                                                                   1,621           (4,442)
Other, net                                                                              5,934           (7,448)
Changes in certain current assets and liabilities --
Receivables, net                                                                       15,315            4,137
Fossil fuel stock                                                                      (3,127)          (8,048)
Materials and supplies                                                                 (1,451)              58
Other current assets                                                                    1,938            6,478
Accounts payable                                                                      (15,065)             799
Taxes accrued                                                                            (684)           4,501
Other current liabilities                                                               6,726            5,045
---------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities                                            46,822           31,325
---------------------------------------------------------------------------------------------------------------
Investing Activities:
---------------------------------------------------------------------------------------------------------------
Gross property additions                                                              (22,070)         (39,801)
---------------------------------------------------------------------------------------------------------------
Cost of removal net of salvage                                                         (2,366)          (2,326)
---------------------------------------------------------------------------------------------------------------
Other                                                                                  (5,563)         (12,573)
---------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                                (29,999)         (54,700)
---------------------------------------------------------------------------------------------------------------
Financing Activities:
Decrease in notes payable, net                                                           (489)         (41,652)
Proceeds --
Senior Notes                                                                           65,000           45,000
Capital contributions from parent company                                              10,943           37,259
Redemptions --
Senior notes                                                                              (32)            (147)
Preferred securities                                                                  (40,000)               -
Payment of preferred stock dividends                                                      (54)             (54)
Payment of common stock dividends                                                     (17,550)         (16,375)
Other                                                                                  (3,729)            (575)
---------------------------------------------------------------------------------------------------------------
Net cash provided from financing activities                                            14,089           23,456
---------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents                                                30,912               81
Cash and Cash Equivalents at Beginning of Period                                       13,278            2,244
---------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                           $ 44,190          $ 2,325
===============================================================================================================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of $20 and $1,109 capitalized for 2003 and 2002, respectively)           $9,957          $11,808
Income taxes (net of refunds)                                                            ($21)         ($1,467)


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

</TABLE>

                                        49

<PAGE>
<TABLE>
<CAPTION>

                                                       GULF POWER COMPANY
                                              CONDENSED BALANCE SHEETS (UNAUDITED)
                                                                                        At March 31,           At December 31,
Assets                                                                                      2003                    2002
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                              (in thousands)

Current Assets:
<S>                                                                                             <C>                     <C>
Cash and cash equivalents                                                                       $ 44,190                $ 13,278
Receivables --
Customer accounts receivable                                                                      40,948                  48,609
Unbilled revenues                                                                                 23,363                  28,077
Under recovered regulatory clause revenues                                                        31,236                  29,549
Other accounts and notes receivable                                                                5,263                   6,618
Affiliated companies                                                                               4,512                   8,678
Accumulated provision for uncollectible accounts                                                    (901)                   (889)
Fossil fuel stock, at average cost                                                                40,318                  37,191
Materials and supplies, at average cost                                                           36,291                  34,840
Prepaid taxes                                                                                      6,844                  12,704
Other                                                                                             18,058                  14,134
---------------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                             250,122                 232,789
---------------------------------------------------------------------------------------------------------------------------------
Property, Plant, and Equipment:
In service                                                                                     2,263,848               2,248,156
Less accumulated provision for depreciation                                                      957,067                 946,408
---------------------------------------------------------------------------------------------------------------------------------
                                                                                               1,306,781               1,301,748
Construction work in progress                                                                     33,261                  35,708
---------------------------------------------------------------------------------------------------------------------------------
Total property, plant, and equipment                                                           1,340,042               1,337,456
---------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments                                                                    11,292                  10,157
---------------------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes                                                          18,490                  18,798
Prepaid pension costs                                                                             37,543                  36,298
Unamortized debt issuance expense                                                                  5,190                   3,900
Unamortized premium on reacquired debt                                                            14,898                  14,052
Other                                                                                             20,099                  20,379
---------------------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets                                                           96,220                  93,427
---------------------------------------------------------------------------------------------------------------------------------
Total Assets                                                                                 $ 1,697,676             $ 1,673,829
------------------------------------------------------------------------------------=====================---=====================



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

</TABLE>

                                       50

<PAGE>

<TABLE>
<CAPTION>
                                                       GULF POWER COMPANY
                                              CONDENSED BALANCE SHEETS (UNAUDITED)



                                                                                        At March 31,           At December 31,
Liabilities and Stockholder's Equity                                                        2003                    2002
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                     (in thousands)
Current Liabilities:
<S>                                                                                             <C>                    <C>
Securities due within one year                                                                  $ 80,000               $ 100,000
Notes payable                                                                                     27,991                  28,479
Accounts payable --
Affiliated                                                                                        22,524                  26,395
Other                                                                                             24,038                  39,685
Customer deposits                                                                                 16,755                  16,047
Taxes accrued --
Income taxes                                                                                      11,453                  10,718
Other                                                                                              8,487                   9,170
Interest accrued                                                                                   7,273                   7,875
Vacation pay accrued                                                                               5,044                   5,044
Other                                                                                              6,421                   3,933
---------------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                        209,986                 247,346
---------------------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                                   496,115                 452,040
---------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes                                                                169,208                 167,689
Deferred credits related to income taxes                                                          28,750                  29,692
Accumulated deferred investment tax credits                                                       21,798                  22,289
Employee benefits provisions                                                                      40,920                  39,656
Other                                                                                             54,793                  46,376
---------------------------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities                                                     315,469                 305,702
---------------------------------------------------------------------------------------------------------------------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes                                                                               115,000                 115,000
---------------------------------------------------------------------------------------------------------------------------------
Preferred stock                                                                                    4,236                   4,236
---------------------------------------------------------------------------------------------------------------------------------
Common Stockholder's Equity:
Common stock, without par value--
Authorized  - 992,717 shares
Outstanding - 992,717 shares                                                                      38,060                  38,060
Paid-in capital                                                                                  360,712                 349,769
Premium on preferred stock                                                                            12                      12
Retained earnings                                                                                158,820                 162,398
Accumulated other comprehensive loss                                                                (734)                   (734)
---------------------------------------------------------------------------------------------------------------------------------
Total common stockholder's equity                                                                556,870                 549,505
---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity                                                   $ 1,697,676             $ 1,673,829
=================================================================================================================================


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

</TABLE>

                                       51


<PAGE>



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

                    FIRST QUARTER 2003 vs. FIRST QUARTER 2002


RESULTS OF OPERATIONS

Earnings

Gulf Power's net income after dividends on preferred stock for the first quarter
2003 was $14 million compared to $11.7 million for the corresponding period in
2002. First quarter 2003 earnings increased by $2.3 million, or 19.2%, primarily
due to higher operating revenues when compared to the same period in 2002.

     Significant income statement items appropriate for discussion include the
following:

                                                    Increase (Decrease)
                                            ----------------------------------
                                                       First Quarter
                                            ----------------------------------
                                                (in thousands)          %
Retail sales...............................      $26,299               19.7
Sales for resale - non-affiliates..........        1,291                7.4
Sales for resale - affiliates..............        7,636              295.9
Other revenues.............................        1,679               22.6
Fuel expense...............................       26,512               72.1
Purchased power - affiliates...............       (4,474)             (26.2)
Other operations expense...................        3,086               11.5
Maintenance expense........................       (1,609)              (8.8)
Depreciation and amortization..............        2,961               17.1
Taxes other than income taxes..............        1,973               13.7
Allowances for equity funds used during
  construction.............................       (2,331)             (98.2)

     Retail sales. Excluding the recovery of fuel expense and certain other
expenses that do not affect net income, retail sales increased by $13 million,
or 16.4%, for the first quarter 2003 when compared to the same period in 2002.
Energy sales to commercial and industrial customers were higher by 2.5% and
8.3%, respectively, in the first quarter 2003 as compared to the same period in
2002. However, residential energy sales were slightly down by 0.9% in the first
quarter 2003 from the first quarter of the prior year. Associated revenues for
residential, commercial and industrial customers increased by 18.4%, 18% and
29.2%, due mainly to the retail rate increase that became effective in June 2002
and growth in the number of customers served in Gulf Power's service area.

     Sales for resale - non-affiliates. Sales for resale to non-affiliates
increased for the first quarter 2003 when compared to the corresponding period
in 2002 mainly due to a 10% increase in energy sales to these customers. These
transactions do not have a significant impact on earnings since the energy is
usually sold at variable cost.

     Sales for resale - affiliates and Purchased power - affiliates. Revenues
from sales for resale to affiliated companies and purchases of energy within the
Southern Company system will vary depending on demand and the availability and
cost of generating resources at each company. Gulf Power increased its
generating resources with commercial operation of Plant Smith in April 2002 and
thus had greater generation resources to sell to affiliates. These transactions
do not have a significant impact on earnings.

                                       52
<PAGE>


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


     Other revenues. During the first quarter 2003, other revenues were higher
than the same period in 2002 primarily due to an increase of $622 thousand in
miscellaneous service revenues and an increase of $752 thousand in franchise
fees resulting from the retail rate increase that became effective in June 2002.

     Fuel expense. In the first quarter 2003, fuel expense was higher than the
same period in 2002 due primarily to the commercial operation of Plant Smith
Unit 3 in April 2002 coupled with a 53.4% increase in natural gas prices as well
as increased generation to meet additional demand for energy. Since energy
expenses are generally offset by energy revenues through Gulf Power's fuel cost
recovery mechanism, these expenses do not have a significant impact on net
income.

     Other operation expense. The increase in other operation expense during the
first quarter 2003 is primarily attributed to a $712 thousand increase in
customer accounts expenses and a $1,652 thousand increase in administrative and
general expenses.

     Maintenance expense. The first quarter 2003 decrease in maintenance expense
from the same period in the prior year reflects more scheduled production
maintenance performed in 2002 than in the first quarter 2003.

     Depreciation and amortization. The increase in utility plant in service
since the first quarter 2002 is the main cause of the increase in depreciation
and amortization in the first quarter 2003 as compared to the first quarter
2002.

     Taxes other than income taxes. Taxes other than income taxes increased in
the first quarter 2003 due primarily to property taxes on Plant Smith Unit 3 and
revenue taxes related to the 2002 base rate increase.

     Allowance for equity funds used construction. The decrease in this item in
the first quarter 2003 as compared to the same period in 2002 reflects the
completion of construction of Plant Smith Unit 3 in 2002.

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. The major factors include regulatory matters and the ability to achieve
energy sales growth. For additional information relating to these issues, see
Item 1 - BUSINESS - "Risk Factors" and Item 7 - MANAGEMENT'S DISCUSSION AND
ANALYSIS - "Future Earnings Potential" of Gulf Power in the Form 10-K.

     Gulf Power is subject to certain claims and legal actions arising in the
ordinary course of business. Gulf Power's business activities are subject to
extensive governmental regulation related to public health and the environment.
Litigation over environmental issues and claims of various types, including
property damage, personal injury and citizen enforcement of environmental
requirements, has increased generally throughout the United States. In
particular, personal injury claims for damages caused by alleged exposure to
hazardous materials have become more frequent. The ultimate outcome of such
litigation currently filed against Gulf Power cannot be predicted at this time;
however after consultation with legal counsel, management does not anticipate
that the liabilities, if any, arising from such proceedings would have a
material adverse effect on Gulf Power's financial statements.

                                       53
<PAGE>


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


     Compliance costs related to the Clean Air Act could affect earnings if such
costs are not fully recovered through Gulf Power's Environmental Cost Recovery
Clause. For additional information about the Clean Air Act and other
environmental issues, including the EPA litigation, see Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Environmental Matters" and Note 3 to the financial
statements of Gulf Power in the Form 10-K.

     In 2002 the Florida PSC approved an annual base rate increase for Gulf
Power of $53.2 million which became effective in June 2002. Reference is made to
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of
Gulf Power in the Form 10-K for additional information.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential - FERC Matters" of Gulf Power in the Form 10-K for
information on the formation of an RTO as ordered by the FERC and the notice of
proposed rulemaking regarding open access transmission service and standard
electricity market design. In April 2003, the FERC issued a White Paper related
to its proposed rulemaking regarding open access transmission service and
standard electricity market design in an effort to respond to certain of the
public comments received on the standard market design proposal. Evident in the
White Paper are continuing differences in opinion between the FERC and various
state regulatory commissions over questions of jurisdiction and protection of
retail customers. Pending energy legislation may also impact these issues. Any
impact of this proposal on Southern Company and its subsidiaries will depend on
the form in which final rules may be ultimately adopted; however, Gulf Power's
revenues, expenses, assets and liabilities could be adversely affected by
changes in the transmission regulatory structure in its regional power market.

     Reference is made to Notes (A) and (E) through (G) 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.

Accounting Policies

Critical Policy

Gulf Power's significant accounting policies are described in Note 1 to the
financial statements of Gulf Power in Item 8 of the Form 10-K. Gulf Power's only
critical accounting policy involves rate regulation. Gulf Power is 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 Gulf Power's operations is
no longer subject to these provisions, Gulf Power would be required to write off
related regulatory assets and liabilities that are not specifically recoverable
and determine if any other assets, including plant, have been impaired.

New Accounting Standards

Reference is made to Note (H) to the Condensed  Financial  Statements herein for
information  regarding the adoption of FASB Statement No. 143,  "Accounting  for
Asset  Retirement  Obligations"  effective  January 1, 2003.  Statement  No. 143
establishes  new  accounting  and  reporting  standards  for  legal  obligations
associated  with the ultimate cost of retiring  long-lived  assets.  The present
value of the ultimate costs for an asset's future retirement must be recorded in
the period in which the liability is incurred.  The cost must be  capitalized as
part of the related  long-lived  asset and  depreciated  over the asset's useful
life. Additionally, Statement No. 143 does not permit non-regulated companies to
continue accruing future retirement costs for long-lived assets that they do not
have a legal obligation to retire. Prior to January 2003, Gulf Power


                                       54
<PAGE>



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


accrued for the ultimate cost of retiring most long-lived assets over the life
of the related asset through depreciation expense.


FINANCIAL CONDITION

Overview

Major changes in Gulf Power's financial condition during the first three months
of 2003 included the addition of approximately $22.1 million to utility plant.
The funds for these additions and other capital requirements were derived
primarily from operations. See Gulf Power's Condensed Statements of Cash Flows
herein for further details.

Credit Rating Risk

Gulf Power does not have any credit agreements that would require material
changes in payment schedules or terminations as a result of a credit rating
downgrade.

Exposure to Market Risks

Gulf Power's market risk exposures relative to interest rate changes have not
changed materially compared with the December 31, 2002 reporting period. In
addition, Gulf Power is not aware of any facts or circumstances that would
significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Gulf Power has limited exposure to
market volatility in interest rates, commodity fuel prices and prices of
electricity. To mitigate residual risks relative to movements in electricity
prices, Gulf Power enters into fixed price contracts for the purchase and sale
of electricity through the wholesale electricity market and, to a lesser extent,
similar contracts for gas purchases. Gulf Power has received approval from the
Florida PSC to recover prudently incurred costs related to its fuel hedging
program through the fuel cost recovery mechanism. The fair value of derivative
energy contracts at March 31, 2003 was as follows:

                                                  First Quarter
                                                      2003
                                                     Changes
     --------------------------------------- ----------------------
                                                   Fair Value
     --------------------------------------- ----------------------
                                                 (in thousands)
     Contracts beginning of period                    $2,336
     Contracts realized or settled                      (491)
     New contracts at inception                            -
     Changes in valuation techniques                       -
     Current period changes                            2,110
     --------------------------------------- ----------------------
     Contracts at March 31, 2003                      $3,955
     ======================================= ======================

                                       55

<PAGE>


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





                                              Source of March 31, 2003
                                                 Valuation Prices
    ------------------------------- --------------- -----------------------
                                         Total              Maturity
                                                    -----------------------
                                     Fair Value     Year 1      1-3 Years
     ------------------------------- ---------------------------------------
                                                        (in thousands)
    Actively quoted                   $3,955         $4,795     $(840)
    External sources                       -              -          -
    Models and other methods               -              -          -
    ------------------------------- --------------- -----------------------
    Contracts at March 31, 2003       $3,955         $4,795     $(840)
    =============================== =============== =======================

     Unrealized gains and losses from mark to market adjustments on contracts
related to fuel hedging programs are recorded as regulatory assets and
liabilities. Realized gains and losses from these programs are included in fuel
expense and are recovered through Gulf Power's fuel cost recovery clause. Gains
and losses on contracts that do not represent hedges are recognized in the
income statement as incurred. At March 31, 2003, the fair value of derivative
energy contracts was reflected in the financial statements as follows:

                                                       Amounts
-----------------------------------------------------------------------------
                                                (in thousands)
Regulatory liabilities, net                             $3,977
Other comprehensive income                                   -
Net income                                                (22)
-----------------------------------------------------------------------------
   Total fair value                                     $3,955
=============================================================================

     There were no material realized gains or losses recognized in income for
the quarters ended March 31, 2003 and 2002.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Exposure to Market Risks" of Gulf Power in the Form 10-K and Note 1 to the
financial statements of Gulf Power in Item 8 of the Form 10-K for additional
information.

Financing Activities

In January 2003, Gulf Power redeemed $40 million of 7.625% trust preferred
securities using the proceeds of $40 million in trust preferred securities
issued in December 2002 at a five-year initial fixed rate of 5.60%.

     In March 2003, Gulf Power issued $65 million of Series F Senior Insured
Quarterly Notes due April 1, 2033. The proceeds from this issue were used to
redeem in April 2003, the $20 million Series B 7.50% Junior Subordinated Notes
due June 30, 2037. In May 2003, the $45 million of Series E Senior Notes due
January 30, 2012 will also be redeemed.


                                       56


<PAGE>


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


     In April 2003, Gulf Power sold through public authorities $29.075 million
of variable rate pollution control revenue refunding bonds due February 1, 2026.
The proceeds were used to redeem (1) $7.875 million aggregate principal amount
of water pollution control revenue refunding bonds, Series 1993 and (2) $21.2
million of pollution control revenue refunding bonds, Series 1996.

     Also in April 2003, Gulf Power sold through public authorities $32.55
million of variable rate pollution control revenue bonds due June 1, 2023. The
proceeds were used to redeem the outstanding amount of pollution control revenue
refunding bonds, Series 1993. Both pollution control bonds issued in April 2003
will bear interest at a rate to be determined by the auction rate process and
will not require backup bank credit facilities.

     Gulf Power plans to continue, to the extent possible, a program to retire
higher-cost securities and replace these obligations with lower-cost capital if
market conditions permit.

Capital Requirements

Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of Gulf Power
under "Capital Requirements for Construction," "Other Capital Requirements" and
"Environmental Matters" in the Form 10-K for a description of Gulf Power'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, Gulf Power
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 Power had at March
31, 2003 approximately $44.2 million of cash and cash equivalents and $66.3
million of unused committed lines of credit with banks that expire in 2003. The
credit arrangements provide liquidity support to Gulf Power's obligations with
respect to variable rate pollution control bonds and commercial paper. Gulf
Power may also meet short-term cash needs through a Southern Company subsidiary
organized to issue and sell commercial paper and extendible commercial notes at
the request and for the benefit of Gulf Power and other Southern Company
subsidiaries. At March 31, 2003, Gulf Power had outstanding $20 million of notes
payable and $7.9 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.


                                       57
<PAGE>

                           MISSISSIPPI POWER COMPANY



                                       58

<PAGE>
<TABLE>
<CAPTION>
                                                       MISSISSIPPI POWER COMPANY
                                              CONDENSED STATEMENTS OF INCOME (UNAUDITED)


                                                                                   For the Three Months
                                                                                      Ended March 31,
                                                                                    2003           2002
-------------------------------------------------------------------------------------------------------------
                                                                                        (in thousands)
Operating Revenues:
<S>                                                                                  <C>            <C>
Retail sales                                                                         $113,970       $118,467
Sales for resale --
Non-affiliates                                                                         70,425         52,152
Affiliates                                                                              6,223          9,613
Other revenues                                                                          3,268          2,826
-------------------------------------------------------------------------------------------------------------
Total operating revenues                                                              193,886        183,058
-------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel                                                                                   51,124         60,202
Purchased power --
Non-affiliates                                                                          6,817          2,841
Affiliates                                                                             20,332          7,406
Other                                                                                  35,163         35,361
Maintenance                                                                            14,260         20,671
Depreciation and amortization                                                          13,073         14,512
Taxes other than income taxes                                                          13,367         13,192
-------------------------------------------------------------------------------------------------------------
Total operating expenses                                                              154,136        154,185
-------------------------------------------------------------------------------------------------------------
Operating Income                                                                       39,750         28,873
Other Income and (Expense):
Interest expense                                                                       (3,770)        (5,046)
Distributions on preferred securities of subsidiary                                      (630)          (748)
Other income (expense), net                                                                12            193
-------------------------------------------------------------------------------------------------------------
Total other income and (expense)                                                       (4,388)        (5,601)
-------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes                                                           35,362         23,272
Income taxes                                                                           13,463          8,787
-------------------------------------------------------------------------------------------------------------
Net Income                                                                             21,899         14,485
Dividends on Preferred Stock                                                              503            503
-------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock                                        $ 21,396        $13,982
=============================================================================================================


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

</TABLE>

                                    59

<PAGE>
<TABLE>
<CAPTION>
                            MISSISSIPPI POWER COMPANY
                 CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                                                      For the Three Months
                                                                                        Ended March 31,
                                                                                     2003             2002
-----------------------------------------------------------------------------------------------------------------
                                                                                         (in thousands)
Operating Activities:
<S>                                                                                    <C>              <C>
Net income                                                                             $ 21,899         $ 14,485
Adjustments to reconcile net income
 to net cash provided from operating activities --
Depreciation and amortization                                                            15,910           15,531
Deferred income taxes and investment tax credits, net                                    (1,267)          (5,429)
Other, net                                                                               (1,102)           3,063
Changes in certain current assets and liabilities --
Receivables, net                                                                         26,326           15,279
Fossil fuel stock                                                                         2,204             (310)
Materials and supplies                                                                     (529)            (989)
Other current assets                                                                     (4,940)          (6,039)
Accounts payable                                                                        (38,725)          (8,184)
Taxes accrued                                                                           (18,080)         (15,079)
Other current liabilities                                                                (7,883)             515
-----------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) operating activities                                   (6,187)          12,843
-----------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions                                                                (11,806)         (18,687)
Other                                                                                       296           (6,807)
-----------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                                  (11,510)         (25,494)
-----------------------------------------------------------------------------------------------------------------
Financing Activities:
Increase in notes payable, net                                                           19,975           19,958
Proceeds --
Senior notes                                                                                  -           80,000
Preferred securities                                                                          -           35,000
Capital contributions from parent company                                                   606              220
Redemptions --
First mortgage bonds                                                                    (33,350)               -
Pollution control bonds                                                                    (850)               -
Senior notes                                                                                (73)         (80,104)
Payment of preferred stock dividends                                                       (503)            (503)
Payment of common stock dividends                                                       (16,500)         (15,875)
Other                                                                                    (1,178)               -
-----------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities                                  (31,873)          38,696
-----------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents                                                 (49,570)          26,045
-----------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning of Period                                         62,695           18,950
Cash and Cash Equivalents at End of Period                                             $ 13,125         $ 44,995
=================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest                                                                                 $2,612           $2,233
Income taxes (net of refunds)                                                             ($226)          $6,502




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


</TABLE>


                                           60
<PAGE>
<TABLE>
<CAPTION>
                            MISSISSIPPI POWER COMPANY
                      CONDENSED BALANCE SHEETS (UNAUDITED)


                                                                               At March 31,          At December 31,
Assets                                                                             2003                   2002
-----------------------------------------------------------------------------------------------------------------------
                                                                                            (in thousands)
Current Assets:
<S>                                                                                   <C>                     <C>
Cash and cash equivalents                                                             $ 13,125                $ 62,695
Receivables --
Customer accounts receivable                                                            28,427                  31,136
Unbilled revenues                                                                       15,616                  18,434
Under recovered regulatory clause revenues                                              15,830                  27,233
Other accounts and notes receivable                                                      6,784                   8,056
Affiliated companies                                                                    11,225                  20,674
Accumulated provision for uncollectible accounts                                          (695)                   (718)
Fossil fuel stock, at average cost                                                      25,099                  27,303
Materials and supplies, at average cost                                                 22,592                  22,063
Assets from risk management activities                                                  13,728                  13,061
Deferred income tax assets                                                              19,652                  18,675
Other                                                                                   11,843                   7,469
-----------------------------------------------------------------------------------------------------------------------
Total current assets                                                                   183,226                 256,081
-----------------------------------------------------------------------------------------------------------------------
Property, Plant, and Equipment:
In service                                                                           1,797,523               1,786,378
Less accumulated provision for depreciation                                            732,809                 722,231
-----------------------------------------------------------------------------------------------------------------------
                                                                                     1,064,714               1,064,147
Construction work in progress                                                           31,860                  34,065
-----------------------------------------------------------------------------------------------------------------------
Total property, plant, and equipment                                                 1,096,574               1,098,212
-----------------------------------------------------------------------------------------------------------------------
Other Property and Investments                                                           1,797                   1,768
-----------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes                                                12,514                  12,617
Prepaid pension costs                                                                   15,618                  14,993
Unamortized debt issuance expense                                                        4,149                   4,304
Unamortized premium on reacquired debt                                                   9,226                   7,776
Other                                                                                   18,885                  16,415
-----------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets                                                 60,392                  56,105
-----------------------------------------------------------------------------------------------------------------------
Total Assets                                                                       $ 1,341,989             $ 1,412,166
=======================================================================================================================





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



                                           61

<PAGE>

<TABLE>
<CAPTION>
                            MISSISSIPPI POWER COMPANY
                      CONDENSED BALANCE SHEETS (UNAUDITED)



                                                                      At March 31,          At December 31,
Liabilities and Stockholder's Equity                                      2003                   2002
--------------------------------------------------------------------------------------------------------------
                                                                                           (in thousands)
Current Liabilities:
<S>                                                                         <C>                      <C>
Securities due within one year                                              $ 166,555                $ 69,200
Notes payable                                                                  19,975                       -
Accounts payable --
Affiliated                                                                     14,582                  22,396
Other                                                                          61,529                  91,710
Customer deposits                                                               7,339                   6,855
Taxes accrued --
Income taxes                                                                   22,298                  12,042
Other                                                                          13,128                  41,464
Interest accrued                                                                7,645                   6,562
Vacation pay accrued                                                            5,782                   5,782
Regulatory clauses over recovery                                               26,911                  35,680
Other                                                                           8,647                   8,504
--------------------------------------------------------------------------------------------------------------
Total current liabilities                                                     354,391                 300,195
--------------------------------------------------------------------------------------------------------------
Long-term debt                                                                112,481                 243,715
--------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes                                             146,184                 146,631
Deferred credits related to income taxes                                       24,865                  20,798
Accumulated deferred investment tax credits                                    20,751                  21,054
Employee benefits provisions                                                   50,715                  49,869
Other                                                                          42,338                  45,142
--------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities                                  284,853                 283,494
--------------------------------------------------------------------------------------------------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding company junior
subordinated notes                                                             35,000                  35,000
--------------------------------------------------------------------------------------------------------------
Preferred stock                                                                31,809                  31,809
--------------------------------------------------------------------------------------------------------------
Common Stockholder's Equity:
Common stock equity --
  Authorized  - 1,130,000 shares
  Outstanding - 1,121,000 shares
Par value                                                                      37,691                  37,691
Paid-in capital                                                               285,886                 285,280
Premium on preferred stock                                                        326                     326
Retained earnings                                                             200,816                 195,920
Accumulated other comprehensive loss                                           (1,264)                 (1,264)
--------------------------------------------------------------------------------------------------------------
Total common stockholder's equity                                             523,455                 517,953
--------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity                                $ 1,341,989             $ 1,412,166
-------------------------------------------------------------------===================----====================




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

</TABLE>



                                           62

<PAGE>



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

                    FIRST QUARTER 2003 vs. FIRST QUARTER 2002


RESULTS OF OPERATIONS

Earnings

Mississippi Power's net income after dividends on preferred stock for the first
quarter 2003 was $21.4 million, compared to $14.0 million for the corresponding
period of 2002. Earnings increased by $7.4 million, or 52.9%, in the first
quarter 2003 due primarily to higher operating revenues as compared to the same
period in 2002.

     Significant income statement items appropriate for discussion include the
following:

                                                   Increase (Decrease)
                                           -------------------------------------
                                                      First Quarter
                                           -------------------------------------
                                               (in thousands)          %
Retail sales..........................           (4,497)              (3.8)
Sales for resale - non-affiliates.....           18,273               35.0
Sales for resale - affiliates.........           (3,390)             (35.3)
Fuel expense..........................           (9,078)             (15.1)
Purchased power - non-affiliates......            3,976              140.0
Purchased power - affiliates..........           12,926              174.5
Maintenance expense...................           (6,411)             (31.0)
Depreciation and amortization.........           (1,439)              (9.9)

     Retail sales. Excluding fuel revenues, which generally do not affect net
income, retail sales revenue decreased by $1.4 million, or 1.9%, in the first
quarter 2003 when compared to the same period in 2002. Retail sales revenues
were lower in the first quarter 2003 primarily due to a decrease in energy sales
to residential, commercial and industrial customers of 3%, 0.3% and 5.1%,
respectively, when compared to the same period in 2002. Energy sales were lower
as a direct result of milder weather in Mississippi Power's service area and the
continued economic slowdown in Mississippi Power's service area.

     Sales for resale - non-affiliates. During the first quarter 2003, sales for
resale to non-affiliates were higher when compared to the same period in 2002.
This increase is primarily attributed to a 23.7% increase in wholesale prices
and, to a lesser extent, a 12.9% increase in energy sales as compared to the
same period in 2002.

     Sales for resale - affiliates and Purchased power - affiliates. Revenues
from sales for resale to affiliated companies, as well as purchases of energy,
within the Southern Company system will vary 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 in the first quarter 2003
compared to the same period in 2002 is principally due to opportunities to
purchase some power more economically than to self-generate. Since energy
expenses are generally offset by energy revenues through Mississippi Power's
retail and wholesale fuel cost recovery clauses, these expenses do not have a
significant impact on earnings.


                                       63

<PAGE>


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


     Purchased power - non-affiliates. In the first quarter 2003, purchased
power from non-affiliates was higher when compared to the first quarter 2002
primarily because Mississippi Power had opportunities to purchase some power at
a lower cost than the cost of self-generation. Generally, these purchased power
transactions do not have a significant impact on net income since energy
expenses are generally offset by energy revenues through Mississippi Power's
retail and wholesale fuel cost recovery clauses.

     Maintenance expense. This expense was lower in the first quarter 2003 as
compared to the same period in the prior year, due to scheduled maintenance
performed at Plant Watson and Plant Daniel in the first quarter 2002.

     Depreciation and amortization. The first quarter 2003 decrease is a result
of a credit to amortization of environmental expenses recorded in early 2003
based on Mississippi Power's latest ECO Plan filing with the Mississippi PSC
when compared to the same period in 2002.


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 the effect of weather and the economy
on energy sales. For additional information relating to these issues, see Item 1
- BUSINESS - "Risk Factors" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of Mississippi Power in the Form 10-K.

     Mississippi Power's business activities are subject to extensive
governmental regulation related to public health and the environment. Litigation
over environmental issues and claims of various types, including property
damage, personal injury and citizen enforcement of environmental requirements,
has increased generally throughout the United States. In particular, personal
injury claims for damages caused by alleged exposure to hazardous materials have
become more frequent. The ultimate outcome of such litigation currently filed
against Mississippi Power cannot be predicted at this time; however, after
consultation with legal counsel, management does not anticipate that the
liabilities, if any, arising from such proceedings would have a material adverse
effect on Mississippi Power's financial statements.

     Mississippi Power's 2003 ECO Plan filing was approved, as filed, by the
Mississippi PSC on March 18, 2003 and resulted in a slight increase in rates.
Compliance costs related to the Clean Air Act could affect earnings if such
costs cannot continue to be recovered. For additional information about the
Clean Air Act and other environmental issues, including the EPA litigation, see
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" and Note
3 to the financial statements of Mississippi Power in the Form 10-K.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential - FERC Matters" of Mississippi Power in the Form 10-K
for information on the formation of an RTO as ordered by the FERC and the notice
of proposed rulemaking regarding open access transmission service and standard
electricity market design. In April 2003, the FERC issued a White Paper related
to its proposed rulemaking regarding open access transmission service and
standard electricity market design in an effort to respond to certain of the
public comments received on the standard market design proposal. Evident in the

                                       64

<PAGE>


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


White Paper are continuing differences in opinion between the FERC and various
state regulatory commissions over questions of jurisdiction and protection of
retail customers. Pending energy legislation may also impact these issues. Any
impact of this proposal on Southern Company and its subsidiaries will depend on
the form in which final rules may be ultimately adopted; however, Mississippi
Power's revenues, expenses, assets and liabilities could be adversely affected
by changes in the transmission regulatory structure in its regional power
market.

     Reference is made to Note (J) in the "Notes to the Condensed Financial
Statements" herein for information regarding the proposed termination of a PPA
between a subsidiary of Dynegy and Mississippi Power. Reference is also made to
Note (M) to the Condensed Financial Statements herein for information on a
proposed settlement in the FERC investigation of Mississippi Power's
transmission facilities agreement with Entergy Corporation.

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

Accounting Policies

Critical Policies

Mississippi Power's significant accounting policies are described in Note 1 to
the financial statements of Mississippi Power in Item 8 of the Form 10-K.
Mississippi Power's critical accounting policies involve rate regulation and
lease accounting. Mississippi Power is 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 Mississippi Power's operations is no longer
subject to these provisions, Mississippi Power would be required to write off
related regulatory assets and liabilities that are not specifically recoverable
and determine if any other assets, including plant, have been impaired.

     Additionally, Mississippi Power accounts for its lease agreement with
Escatawpa Funding, Limited Partnership ("Escatawpa"), as an operating lease.
Under this agreement, Escatawpa, a special purpose entity, is owner-lessor of
the combined-cycle generating units at Mississippi Power's Plant Daniel.
Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Accounting
Policies - Critical Policies" of Mississippi Power in the Form 10-K for
additional information regarding this lease agreement. Mississippi Power is
currently working to restructure this agreement so that it will continue to be
accounted for as an operating lease. The restructured agreement should be
completed in June 2003, prior to the required implementation date of FASB
Interpretation No. 46, "Consolidation of Certain Special-Purpose Entities." If
the agreement is not restructured, FASB Interpretation No. 46 will require that
Mississippi Power consolidate the assets and liabilities of Escatawpa effective
July 1, 2003. Consolidation of these assets and liabilities could require
Mississippi Power to seek additional regulatory review.


                                       65
<PAGE>


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


New Accounting Standards

Reference is made to Note (H) to the Condensed Financial Statements herein for
information regarding the adoption of FASB Statement No. 143, "Accounting for
Asset Retirement Obligations" effective January 1, 2003. Statement No. 143
establishes new accounting and reporting standards for legal obligations
associated with the ultimate cost of retiring long-lived assets. The present
value of the ultimate costs for an asset's future retirement must be recorded in
the period in which the liability is incurred. The cost must be capitalized as
part of the related long-lived asset and depreciated over the asset's useful
life. Additionally, Statement No. 143 does not permit non-regulated companies to
continue accruing future retirement costs for long-lived assets that they do not
have a legal obligation to retire. Prior to January 2003, Mississippi Power
accrued for the ultimate cost of retiring most long-lived assets over the life
of the related asset through depreciation expense.


FINANCIAL CONDITION

Overview

Major changes in Mississippi Power's financial condition during the first three
months of 2003 included the addition of approximately $11.8 million to utility
plant. The funds for these additions and other capital requirements were derived
primarily from cash and cash equivalents. See Mississippi Power's Condensed
Statements of Cash Flows herein for further details.

Off-Balance Sheet Financing Arrangements

In May 2001, Mississippi Power began the initial 10-year term of an operating
lease agreement with Escatawpa, a special purpose entity, to use a
combined-cycle generating facility located at Mississippi Power's Plant Daniel.
The facility cost approximately $370 million. The lease provides for a residual
value guarantee -- approximately 71 percent of the completion cost -- by
Mississippi Power that is due upon termination of the lease in certain
circumstances. Reference is made to Note 8 to the financial statements of
Mississippi Power in Item 8 of the Form 10-K under "Lease Agreements" and to
"Critical Policies" above for additional information.

Credit Rating Risk

Mississippi Power does not have any credit agreements that would require
material changes in payment schedules or terminations as a result of a credit
rating downgrade. There are certain fixed-price physical gas purchase contracts
that could require collateral -- but not accelerated payment -- in the event of
a credit rating change to below investment grade; however, at March 31, 2003,
this exposure was immaterial.

                                       66

<PAGE>


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


Exposure to Market Risks

Mississippi Power's market risk exposures relative to interest rate changes have
not changed materially compared with the December 31, 2002 reporting period. In
addition, Mississippi Power is not aware of any facts or circumstances that
would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Mississippi Power has limited exposure
to market volatility in interest rates, commodity fuel prices and prices of
electricity. To mitigate residual risks relative to movements in electricity
prices, Mississippi Power enters into fixed price contracts for the purchase and
sale of electricity through the wholesale electricity market and, to a lesser
extent, similar contracts for gas purchases. Mississippi Power has also
implemented retail fuel hedging programs at the instruction of its PSC and
wholesale fuel hedging programs under agreements with wholesale customers. The
fair value of derivative, fuel and energy contracts was as follows:
                                                   First Quarter
                                                        2003
                                                      Changes
     --------------------------------------- -------------------------
                                                  Fair Value
      --------------------------------------- ------------------------
                                                (in thousands)
     Contracts beginning of period                   $12,864
     Contracts realized or settled                    (4,151)
     New contracts at inception                            -
     Changes in valuation techniques                       -
     Current period changes                            4,593
     --------------------------------------- -------------------------
     Contracts at March 31, 2003                     $13,306
     ======================================= =========================

All of these contracts are actively quoted and mature within one year.


                                                   Source of March 31, 2003
                                                        Valuation Prices
    ------------------------------ --------------- ---------------------------
                                        Total                Maturity
                                                   ---------------------------
                                       Fair Value    Year 1          1-3 Years
    ------------------------------ -------------------------------------------
                                                       (in thousands)
    Actively quoted                  $13,306         $13,306                $-
    External sources                      -                -                 -
    Models and other methods              -                -                 -
    ------------------------------ --------------- ---------------------------
    Contracts at March 31, 2003      $13,306         $13,306                $-
    ============================== =============== ===========================

     Unrealized gains and losses from mark to market adjustments on contracts
related to the retail and wholesale fuel hedging programs are recorded as
regulatory assets and liabilities. Realized gains and losses from these programs
are included in fuel expense and are recovered through Mississippi Power's
energy cost management clauses. Reference is made to Note 1 to the financial
statements of Mississippi Power in Item 8 of the Form 10-K regarding the
respective approvals of the retail and wholesale energy cost management clauses.

                                       67
<PAGE>


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


Gains and losses on contracts that do not represent hedges are recognized in the
Statements of Income as incurred. At March 31, 2003, the fair value of
derivative energy contracts reflected in the financial statements was as
follows:

                                                      Amounts
     --------------------------------------- -------------------------
     --------------------------------------- -------------------------
                                                (in thousands)
     Regulatory liabilities, net                     $13,329
     Other comprehensive income                            -
     Net loss                                            (23)
     --------------------------------------- -------------------------
     Total fair value                                $13,306
     ======================================= =========================

     For the quarters ended March 31, 2003 and 2002, amounts recognized in
income were immaterial.

     For additional information, reference is made to Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Market Price Risk" of Mississippi Power in the Form
10-K and Note 1 to the financial statements of Mississippi Power in Item 8 of
the Form 10-K.

Financing Activities

In April 2003, Mississippi Power issued $90 million of Series E 5-5/8% Senior
Notes due May 1, 2033. The proceeds from this sale will be used to repay at
maturity $35 million of Mississippi Power's Series B 6.05% Senior Notes due May
1, 2003, to redeem the $51.55 million outstanding principal amount of
Mississippi Power's Series A 6.75% Senior Insured Quarterly Notes due June 30,
2038 and to repay a portion of Mississippi Power's outstanding short-term
indebtedness.

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

Capital Requirements

Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of
Mississippi Power under "Capital Requirements for Construction," "Environmental
Matters" and "Other Capital Requirements" and Note 3 to the financial statements
in the Form 10-K for a description of Mississippi Power's capital requirements
for its construction program, environmental compliance efforts and maturities of
long-term debt.


Sources of Capital

In addition to the financing activities previously described herein, Mississippi
Power 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.

     Mississippi Power's current liabilities exceed current assets because of
the continued use of short-term debt as a funding source to meet cash needs as
well as scheduled maturities of long-term debt.

                                       68

<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 Power had at
March 31, 2003 approximately $13.1 million of cash and cash equivalents and
$79.5 million of unused committed credit arrangements with banks that expire in
2003. Some of these credit arrangements, approximately $35 million, contain
provisions allowing two-year term loans executable at expiration date. The
credit arrangements provide liquidity support to Mississippi Power's obligations
with respect to variable rate pollution control bonds and commercial paper.
Mississippi Power may also meet short-term cash needs through a Southern Company
subsidiary organized to issue and sell commercial paper and extendible
commercial notes at the request and for the benefit of Mississippi Power and
other Southern Company subsidiaries. At March 31, 2003, Mississippi Power had
approximately $20 million of outstanding commercial paper. Management believes
that the need for working capital can be adequately met by utilizing lines of
credit without maintaining large cash balances.


                                       69
<PAGE>



                                SAVANNAH ELECTRIC
                                       AND
                                  POWER COMPANY



                                       70

<PAGE>

<TABLE>
<CAPTION>
                       SAVANNAH ELECTRIC AND POWER COMPANY
                   CONDENSED STATEMENTS OF INCOME (UNAUDITED)



                                                                                         For the Three Months
                                                                                           Ended March 31,
                                                                                         2003           2002
------------------------------------------------------------------------------------------------------------------
                                                                                            (in thousands)



Operating Revenues:
<S>                                                                                        <C>            <C>
Retail sales                                                                               $63,546        $54,947
Sales for resale --
Non-affiliates                                                                               2,034            933
Affiliates                                                                                   2,324            898
Other revenues                                                                               1,078            600
------------------------------------------------------------------------------------------------------------------
Total operating revenues                                                                    68,982         57,378
------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel                                                                                        11,425          8,928
Purchased power --
Non-affiliates                                                                               2,012          1,067
Affiliates                                                                                  19,013         12,127
Other                                                                                       13,099         13,072
Maintenance                                                                                  5,910          5,325
Depreciation and amortization                                                                5,061          6,509
Taxes other than income taxes                                                                3,447          3,485
------------------------------------------------------------------------------------------------------------------
Total operating expenses                                                                    59,967         50,513
------------------------------------------------------------------------------------------------------------------
Operating Income                                                                             9,015          6,865
Other Income and (Expense):
Interest expense, net of amounts capitalized                                                (2,621)        (2,769)
Distributions on preferred securities of subsidiary                                           (685)          (685)
Other income (expense), net                                                                   (209)          (626)
------------------------------------------------------------------------------------------------------------------
Total other income and (expense)                                                            (3,515)        (4,080)
------------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes                                                                 5,500          2,785
Income taxes                                                                                 1,991            983
------------------------------------------------------------------------------------------------------------------
Net Income                                                                                 $ 3,509        $ 1,802
==================================================================================================================




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


                                    71
<PAGE>
<TABLE>
<CAPTION>
                                                SAVANNAH ELECTRIC AND POWER COMPANY
                                          CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                                                             For the Three Months
                                                                                               Ended March 31,
                                                                                             2003           2002
----------------------------------------------------------------------------------------------------------------------
                                                                                                (in thousands)
Operating Activities:
<S>                                                                                            <C>            <C>
Net income                                                                                     $ 3,509        $ 1,802
Adjustments to reconcile net income
 to net cash provided from operating activities --
Depreciation and amortization                                                                    5,582          6,419
Deferred income taxes and investment tax credits, net                                             (439)        (4,453)
Pension, postretirement, and other employee benefits                                             1,670          1,723
Other, net                                                                                       2,143         (1,979)
Changes in certain current assets and liabilities --
Receivables, net                                                                                 5,284          8,986
Fossil fuel stock                                                                               (1,620)         1,869
Materials and supplies                                                                              16          3,294
Other current assets                                                                               (65)        (1,581)
Accounts payable                                                                                (5,347)          (156)
Taxes accrued                                                                                      (46)          (300)
Other current liabilities                                                                       (1,559)        (1,589)
----------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities                                                      9,128         14,035
----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions                                                                       (10,798)        (9,565)
Other                                                                                            3,342            (15)
----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                                          (7,456)        (9,580)
----------------------------------------------------------------------------------------------------------------------
Financing Activities:
Decrease in notes payable, net                                                                  (2,897)           (91)
Proceeds --
Pollution control bonds                                                                         13,870              -
Other long-term debt                                                                                 -            356
Capital contributions from parent company                                                        5,101            822
Redemptions --
First mortgage bonds                                                                                 -           (436)
Pollution control bonds                                                                        (13,870)             -
Other long-term debt                                                                              (225)             -
Payment of common stock dividends                                                               (5,750)        (5,675)
Other                                                                                              (71)             -
----------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities                                                          (3,842)        (5,024)
----------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents                                                         (2,170)          (569)
Cash and Cash Equivalents at Beginning of Period                                                 3,978          2,391
----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                                     $ 1,808        $ 1,822
-----------------------------------------------------------------------------------------==============-==============
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of $27 and $32 capitalized for 2003 and 2002, respectively)                       $1,724         $1,556
Income taxes (net of refunds)                                                                      $ -         $6,806






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


                                          72
<TABLE>
<CAPTION>
                                                SAVANNAH ELECTRIC AND POWER COMPANY
                                                CONDENSED BALANCE SHEETS (UNAUDITED)


                                                                               At March 31,         At December 31,
Assets                                                                             2003                  2002
---------------------------------------------------------------------------------------------------------------------
                                                                                              (in thousands)
Current Assets:
<S>                                                                                    <C>                   <C>
Cash and cash equivalents                                                              $ 1,808               $ 3,978
Receivables --
Customer accounts receivable                                                            18,584                22,631
Unbilled revenues                                                                       10,798                11,531
Other accounts and notes receivable                                                      2,455                 2,937
Affiliated companies                                                                     1,097                 1,102
Accumulated provision for uncollectible accounts                                          (698)                 (682)
Fossil fuel stock, at average cost                                                       9,949                 8,328
Materials and supplies, at average cost                                                  9,570                 9,586
Prepaid taxes                                                                           21,782                20,422
Other                                                                                    6,121                 6,058
---------------------------------------------------------------------------------------------------------------------
Total current assets                                                                    81,466                85,891
---------------------------------------------------------------------------------------------------------------------
Property, Plant, and Equipment:
In service                                                                             886,076               880,604
Less accumulated provision for depreciation                                            422,334               416,232
---------------------------------------------------------------------------------------------------------------------
                                                                                       463,742               464,372
Construction work in progress                                                           12,111                 6,082
---------------------------------------------------------------------------------------------------------------------
Total property, plant, and equipment                                                   475,853               470,454
---------------------------------------------------------------------------------------------------------------------
Other Property and Investments                                                           2,084                 3,648
---------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes                                                11,289                11,692
Cash surrender value of life insurance for deferred compensation plans                  22,045                21,943
Unamortized debt issuance expense                                                        3,755                 3,757
Unamortized premium on reacquired debt                                                   8,018                 8,103
Other                                                                                   14,129                11,717
---------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets                                                 59,236                57,212
---------------------------------------------------------------------------------------------------------------------
Total Assets                                                                         $ 618,639             $ 617,205
-----------------------------------------------------------------------------==================----==================



      The accompanying notes as they relate to Savannah Electric are an integral part of these condensed financial statements.
</TABLE>
                                           73

<PAGE>

<TABLE>
<CAPTION>
                                                SAVANNAH ELECTRIC AND POWER COMPANY
                                                CONDENSED BALANCE SHEETS (UNAUDITED)



                                                                            At March 31,         At December 31,
Liabilities and Stockholder's Equity                                            2003                  2002
------------------------------------------------------------------------------------------------------------------
                                                                                         (in thousands)
Current Liabilities:
<S>                                                                           <C>                   <C>
Securities due within one year                                                $ 20,879              $ 20,892
Notes payable                                                                        -                 2,897
Accounts payable --
Affiliated                                                                       9,758                 7,889
Other                                                                           10,196                15,769
Customer deposits                                                                6,791                 6,781
Taxes accrued --
Income taxes                                                                       777                   311
Other                                                                            2,805                 3,317
Interest accrued                                                                 4,531                 3,268
Vacation pay accrued                                                             2,454                 2,427
Other                                                                           12,375                15,233
-------------------------------------------------------------------------------------------------------------
Total current liabilities                                                       70,566                78,784
-------------------------------------------------------------------------------------------------------------
Long-term debt                                                                 167,841               168,052
-------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes                                               80,163                78,970
Deferred credits related to income taxes                                        11,769                12,445
Accumulated deferred investment tax credits                                      9,123                 9,289
Employee benefits provisions                                                    35,289                33,619
Other                                                                           21,224                16,242
-------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities                                   157,568               150,565
-------------------------------------------------------------------------------------------------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trusts holding company junior
subordinated notes                                                              40,000                40,000
-------------------------------------------------------------------------------------------------------------
Common Stockholder's Equity:
Common stock, par value $5 per share --
  Authorized  - 16,000,000 shares
  Outstanding - 10,844,635 shares
Par value                                                                       54,223                54,223
Paid-in capital                                                                 21,878                16,776
Retained earnings                                                              107,807               110,049
Accumulated other comprehensive loss                                            (1,244)               (1,244)
-------------------------------------------------------------------------------------------------------------
Total common stockholder's equity                                              182,664               179,804
-------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity                                   $ 618,639             $ 617,205
------------------------------------------------------------------------===============----==================



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


                                           74


<PAGE>



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

                    FIRST QUARTER 2003 vs. FIRST QUARTER 2002


RESULTS OF OPERATIONS

Earnings

Savannah Electric's net income for the first quarter 2003 was $3.5 million as
compared to $1.8 million for the corresponding period of 2002. Earnings for the
first quarter 2003 increased by $1.7 million or 94.7% due primarily to higher
operating revenues.

     Significant income statement items appropriate for discussion include the
following:

                                                       Increase (Decrease)
                                               --------------------------------
                                                          First Quarter
                                               --------------------------------
                                                   (in thousands)          %
Retail sales..............................           $8,599               15.6
Sales for resale - non-affiliates.........            1,101              118.0
Sales for resale - affiliates.............            1,426              158.8
Fuel expense..............................            2,497               28.0
Purchased power - non-affiliates..........              945               88.6
Purchased power - affiliates..............            6,886               56.8
Maintenance expense.......................              585               11.0
Depreciation and amortization.............           (1,448)             (22.2)

     Retail sales. Excluding fuel revenues, which do not affect net income,
retail sales revenue increased by $2.7 million, or 7.7%, for the first quarter
2003 when compared to the corresponding period in 2002. Energy sales to
residential and commercial customers were higher by 10.4% and 2.1%,
respectively, due mainly to colder weather and growth in the number of customers
when compared to the same period in 2002. Energy sales to industrial customers
were higher by 16.8% in the first quarter 2003 compared to the first quarter
2002 primarily due to increased usage by one industrial customer. Retail sales
revenues also reflect the base rate increase that took effect in June 2002.

     Sales for resale - non-affiliates. Sales for resale to non-affiliates
during the first quarter 2003 increased when compared to the same period in 2002
primarily due to increased demand for energy by non-affiliates. These
transactions do not have a significant impact on earnings since the energy is
usually sold at cost.

     Sales for resale - affiliates. Revenues from sales for resale to affiliated
companies within the Southern Company system will vary depending on demand and
the availability and cost of generating resources at each company. These
transactions do not have a significant impact on earnings since the energy is
sold at cost.

     Fuel expense. Fuel expense increased in the first quarter 2003 due
primarily to increased generation related to the higher demand for energy.


                                       75

<PAGE>


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


     Purchased power - non-affiliates. The increase in purchased power from
non-affiliates is primarily due to the opportunity to purchase this energy at a
cost lower than self-generation in the first quarter 2003 as compared to the
same period in 2002. Non-affiliated transactions are primarily energy and do not
have a significant impact on earnings, as energy costs are generally recovered
through Savannah Electric's fuel cost recovery clause.

     Purchased power - affiliates. The increase in purchased power from
affiliates in the first quarter 2003 was directly related to the new PPA with
Southern Power which became effective June 2002. The annual capacity costs of
this PPA are approximately $14.0 million. Capacity costs of purchased power are
generally recovered through base rates and the energy component is recovered
through the fuel cost recovery clause. Purchased power from affiliates also
includes energy purchases which will vary depending on demand and cost of
generation resources at each company. These energy costs are recovered through
the fuel cost recovery clause and have no significant impact on earnings.

     Maintenance expense. Maintenance expense in the first quarter 2003
increased when compared to the same period in the prior year due primarily to
scheduled maintenance on steam generating facilities.

     Depreciation and amortization. The decrease in this item during the first
quarter 2003 is primarily due to discontinued accelerated depreciation and the
amortization of the related regulatory liability that began in June 2002, in
accordance with the 2002 base rate order.


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 which include maintaining a stable regulatory environment and achieving
energy sales growth while containing costs. For additional information relating
to these issues, reference is made to Item 1 - BUSINESS - "Risks Factors" and
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of
Savannah Electric in the Form 10-K.

     Savannah Electric's business activities are subject to extensive
governmental regulation related to public health and the environment. Litigation
over environmental issues and claims of various types, including property
damage, personal injury and citizen enforcement of environmental requirements,
has increased generally throughout the United States. In particular, personal
injury claims for damages caused by alleged exposure to hazardous materials have
become more frequent. The ultimate outcome of such litigation currently filed
against Savannah Electric cannot be predicted at this time; after consultation
with legal counsel, management does not anticipate that the liabilities, if any,
arising from such proceedings would have a material adverse effect on Savannah
Electric's financial position, results of operations or cash flows.

     Compliance costs related to the Clean Air Act and other environmental
issues could affect earnings if such costs cannot be recovered. For additional
information about the Clean Air Act and other environmental issues, including
the EPA litigation, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" and Note 3 to the financial statements of Savannah
Electric in the Form 10-K.

                                       76


<PAGE>


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


     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential - FERC Matters" of Savannah Electric in the Form 10-K
for information on the formation of an RTO as ordered by the FERC and the notice
of proposed rulemaking regarding open access transmission service and standard
electricity market design. In April 2003, the FERC issued a White Paper related
to its proposed rulemaking regarding open access transmission service and
standard electricity market design in an effort to respond to certain of the
public comments received on the standard market design proposal. Evident in the
White Paper are continuing differences in opinion between the FERC and various
state regulatory commissions over questions of jurisdiction and protection of
retail customers. Pending energy legislation may also impact these issues. Any
impact of this proposal on Southern Company and its subsidiaries will depend on
the form in which final rules may be ultimately adopted; however, Savannah
Electric's revenues, expenses, assets, and liabilities could be adversely
affected by changes in the transmission regulatory structure in its regional
power market.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential" of Savannah Electric in the Form 10-K for
information on plans to retire a 102 megawatt peaking facility in May 2005 and a
fifteen-year PPA with Southern Power to purchase 200 megawatts of capacity
beginning in June 2005 from the planned combined-cycle plant at Plant McIntosh
to be built and owned by Southern Power. The annual capacity cost is expected to
be approximately $14.5 million. Reference is made to Note (L) to the Condensed
Financial Statements herein for information regarding the FERC approval process
for this PPA.

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

Accounting Policies

Critical Policy

Savannah Electric's significant accounting policies are described in Note 1 to
the financial statements of Savannah Electric in Item 8 of the Form 10-K.
Savannah Electric's only critical accounting policy involves rate regulation.
Savannah Electric is 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 Savannah Electric's operations is no longer subject to these
provisions, Savannah Electric would be required to write off related regulatory
assets and liabilities that are not specifically recoverable and determine if
any other assets have been impaired.

New Accounting Standards

Reference is made to Note (H) to the Condensed Financial Statements herein for
information regarding the adoption of FASB Statement No. 143, "Accounting for
Asset Retirement Obligations" effective January 1, 2003. Statement No. 143
establishes new accounting and reporting standards for legal obligations
associated with the ultimate cost of retiring long-lived assets. The present
value of the ultimate costs for an asset's future retirement must be recorded in
the period in which the liability is incurred. The cost must be capitalized as
part of the related long-lived asset and depreciated over the asset's useful
life. Additionally, Statement No. 143 does not permit non-regulated companies to



                                       77
<PAGE>


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


continue accruing future retirement costs for long-lived assets that they do not
have a legal obligation to retire. Prior to January 2003, Savannah Electric
accrued for the ultimate cost of retiring most long-lived assets over the life
of the related asset through depreciation expense.


FINANCIAL CONDITION

Overview

Major changes in Savannah Electric's financial condition during the first three
months of 2003 included the addition of approximately $10.8 million to utility
plant. The funds for these additions and other capital requirements were derived
primarily from operations and the issuance of securities. See Savannah
Electric's Condensed Statements of Cash Flows herein for further details.

Credit Rating Risk

Savannah Electric does not have any credit agreements that would require
material changes in payment schedules or terminations as a result of a credit
rating downgrade.

Exposure to Market Risks

Savannah Electric's market risk exposures relative to interest rate changes have
not changed materially compared with the December 31, 2002 reporting period. In
addition, Savannah Electric is not aware of any facts or circumstances that
would significantly affect such exposures in the near term.

     Due to cost-based rate regulations, Savannah Electric has limited exposure
to market volatility in interest rates, commodity fuel prices and prices of
electricity. To mitigate residual risks relative to movements in electricity
prices, Savannah Electric enters into fixed price contracts for the purchase and
sale of electricity through the wholesale electricity market and, to a lesser
extent, similar contracts for gas purchases. Savannah Electric has also
implemented a retail fuel hedging program at the instruction of its PSC. The
fair value of derivative energy contracts at March 31, 2003 was as follows:

                                                   First Quarter
                                                        2003
                                                      Changes
     --------------------------------------- -------------------------
                                                  Fair Value
     --------------------------------------- -------------------------
                                                (in thousands)
     Contracts beginning of period                      $626
     Contracts realized or settled                         -
     New contracts at inception                            -
     Changes in valuation techniques                       -
     Current period changes                              644
     --------------------------------------- -------------------------
     Contracts at March 31, 2003                      $1,270
     ======================================= =========================







                                       78

<PAGE>


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




                                                 Source of March 31, 2003
                                                     Valuation Prices
     ------------------------------ -------------------------------------------
                                         Total                Maturity
                                                  -----------------------------
                                      Fair Value     Year 1           1-3 Years
     ------------------------------ -------------------------------------------
                                                       (in thousands)
     Actively quoted                   $1,270        $1,630             $(360)
     External sources                      -              -                 -
     Models and other methods              -              -                 -
     ------------------------------ ------------- -----------------------------
     Contracts at March 31, 2003       $1,270        $1,630             $(360)
     ============================== ============= =============================

     Unrealized gains and losses from mark to market adjustments on contracts
related to the retail fuel hedging programs are recorded as regulatory assets
and liabilities. At March 31, 2003, Savannah Electric had approximately $1.3
million in regulatory liabilities related to unrealized gains on mark to market
derivative contracts associated with its fuel hedging programs. Realized gains
and losses from these programs are included in fuel expense and are recovered
through Savannah Electric's fuel cost recovery clause. Gains and losses on
contracts that do not represent hedges are recognized in the Statements of
Income as incurred. For the quarters ended March 31, 2003 and 2002, these
amounts were not material.

     For additional information, reference is made to Item 7 - MANAGEMENT'S
DISCUSSION AND ANALYSIS - "Exposure to Market Risks" of Savannah Electric in the
Form 10-K and Note 1 to the financial statements of Savannah Electric in Item 8
of the Form 10-K.

Financing Activities

In February 2003, Savannah Electric sold through public authorities an aggregate
principal amount of $13.87 million of variable rate Pollution Control Revenue
Bonds, Series 2003 due February 1, 2038. The proceeds from this sale, together
with any investment proceeds and other moneys of Savannah Electric, were used to
redeem $13.87 million aggregate principal amount of Development Authority of
Effingham County Pollution Control Revenue Bonds, Series 1997. The 2003 bonds
will bear interest at a rate to be determined by the auction rate process.
Unlike the redeemed bonds, the 2003 bonds will not require backup bank credit
facilities.

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

Capital Requirements

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



                                       79
<PAGE>


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



Sources of Capital

Savannah Electric 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 Electric had at
March 31, 2003 approximately $1.8 million of cash and cash equivalents and $55
million of unused committed credit arrangements with banks, of which $40 million
expires in 2003 and $15 million expires in 2004 and beyond. The credit
arrangements provide liquidity support to some of Savannah Electric's
obligations with respect to its variable rate debt and its commercial paper.
Savannah Electric may also meet short-term cash needs through a Southern Company
subsidiary organized to issue and sell commercial paper and extendible
commercial notes at the request and for the benefit of Savannah Electric and
other Southern Company subsidiaries. At March 31, 2003, Savannah Electric had no
outstanding notes payable or commercial paper. Since Savannah Electric has no
major generating plants under construction, management believes that the need
for working capital can be adequately met by utilizing lines of credit.

                                       80

<PAGE>


                             SOUTHERN POWER COMPANY




                                       81
<PAGE>
<TABLE>
<CAPTION>
                                                       SOUTHERN POWER COMPANY
                                             CONDENSED STATEMENTS OF INCOME (UNAUDITED)


                                                                                    For the Three Months
                                                                                      Ended March 31,
                                                                                  2003               2002
----------------------------------------------------------------------------------------------------------------
                                                                                        (in thousands)
Operating Revenues:
Sales for resale --
<S>                                                                                 <C>                <C>
Non-affiliates                                                                      $ 50,269           $ 17,487
Affiliates                                                                            55,290              1,810
Other revenues                                                                         1,880                  2
----------------------------------------------------------------------------------------------------------------
Total Operating Revenues                                                             107,439             19,299
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel                                                                                  20,038              1,992
Purchased power --
Non-affiliates                                                                        15,323              3,114
Affiliates                                                                            17,932              1,370
Other                                                                                  5,908              2,189
Maintenance                                                                            2,177                 70
Depreciation and amortization                                                          6,544              2,001
Taxes other than income taxes                                                          1,300                701
----------------------------------------------------------------------------------------------------------------
Total operating expenses                                                              69,222             11,437
----------------------------------------------------------------------------------------------------------------
Operating Income                                                                      38,217              7,862
Other Income and (Expense):
Interest expense, net of amounts capitalized                                          (1,399)                 -
Other income (expense), net                                                              303               (596)
----------------------------------------------------------------------------------------------------------------
Total other income and (expense)                                                      (1,096)              (596)
----------------------------------------------------------------------------------------------------------------
Earnings Before Income Taxes                                                          37,121              7,266
Income taxes                                                                          14,363              2,811
----------------------------------------------------------------------------------------------------------------
Earnings Before Cumulative Effect of
Accounting Change                                                                     22,758              4,455
Cumulative effect of accounting change --
less income taxes of $231 thousand                                                       367                  -
----------------------------------------------------------------------------------------------------------------
Net Income                                                                          $ 23,125             $4,455
-----------------------------------------------------------------------------================--=================




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



                                82


<PAGE>

<TABLE>
<CAPTION>
                                                       SOUTHERN POWER COMPANY
                                           CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                                                       For the Three Months
                                                                                          Ended March 31,
                                                                                       2003             2002
-------------------------------------------------------------------------------------------------------------------
                                                                                          (in thousands)


Operating Activities:
<S>                                                                                      <C>               <C>
Net income                                                                               $ 23,125          $ 4,455
Adjustments to reconcile net income
 to net cash provided from operating activities --
Depreciation and amortization                                                               6,544            2,001
Deferred income taxes and investment tax credits, net                                       9,062           (1,294)
Deferred capacity revenues                                                                (12,389)          (1,707)
Other, net                                                                                    841              875
Changes in certain current assets and liabilities --
Receivables, net                                                                           (1,857)          (3,435)
Fossil fuel stock                                                                           7,917              294
Materials and supplies                                                                        (79)               -
Other current assets                                                                       (1,544)              50
Accounts payable                                                                          (10,629)           1,715
Taxes accrued                                                                               1,764            5,357
Interest accrued                                                                          (12,618)               -
-------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities                                                10,137            8,311
-------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions                                                                 (103,974)        (585,947)
Increase in construction related payables                                                  (8,042)          (5,899)
Other                                                                                         239           (1,498)
-------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                                   (111,777)        (593,344)
-------------------------------------------------------------------------------------------------------------------
Financing Activities:
Increase in notes payable, net                                                            458,435           88,892
Proceeds --
Other long-term debt                                                                            -          287,000
Capital contributions from parent company                                                     154          244,410
Redemptions --
Other long-term debt                                                                     (373,979)               -
Other                                                                                         234              405
-------------------------------------------------------------------------------------------------------------------
Net cash provided from financing activities                                                84,844          620,707
-------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents                                                   (16,796)          35,674
Cash and Cash Equivalents at Beginning of Period                                           19,474            3,711
-------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                                $ 2,678         $ 39,385
---------------------------------------------------------------------------------=================-================
Supplemental Cash Flow Information:
Cash paid during the period for --
Interest (net of $13,526 and $4,973 capitalized for 2003 and 2002, respectively)          $12,767              $ -
Income taxes (net of refunds)                                                              $4,018            ($389)



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

</TABLE>

                                         83
<PAGE>
<TABLE>
<CAPTION>
                                                       SOUTHERN POWER COMPANY
                                                CONDENSED BALANCE SHEETS (UNAUDITED)



                                                                                 At March 31,          At December 31,
Assets                                                                               2003                   2002
------------------------------------------------------------------------------------------------------------------------
                                                                                                (in thousands)
Current Assets:
<S>                                                                                       <C>                  <C>
Cash and cash equivalents                                                                 $ 2,678              $ 19,474
Receivables --
Customer accounts receivable                                                                5,324                 6,609
Affiliated companies                                                                       14,697                11,555
Accumulated provision for uncollectible accounts                                             (350)                 (350)
Fossil fuel stock, at average cost                                                          3,113                11,031
Materials and supplies, at average cost                                                     6,633                 6,553
Prepayments                                                                                11,623                 8,796
Other                                                                                      10,033                 9,954
------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                       53,751                73,622
------------------------------------------------------------------------------------------------------------------------
Property, Plant, and Equipment:
In service                                                                                923,940               896,163
Less accumulated provision for depreciation                                                27,461                21,590
------------------------------------------------------------------------------------------------------------------------
                                                                                          896,479               874,573
------------------------------------------------------------------------------------------------------------------------
Construction work in progress                                                           1,159,850             1,082,987
------------------------------------------------------------------------------------------------------------------------
Total property, plant, and equipment                                                    2,056,329             1,957,560
------------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Accumulated deferred income taxes                                                          32,594                38,591
Unamortized debt issuance expense                                                          11,708                12,177
Other                                                                                       3,914                 4,026
------------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets                                                    48,216                54,794
------------------------------------------------------------------------------------------------------------------------
Total Assets                                                                          $ 2,158,296           $ 2,085,976
------------------------------------------------------------------------------====================---===================





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


                                           84

<PAGE>

<TABLE>
<CAPTION>
                                                       SOUTHERN POWER COMPANY
                                                CONDENSED BALANCE SHEETS (UNAUDITED)



                                                                                    At March 31,          At December 31,
Liabilities and Stockholder's Equity                                                    2003                   2002
---------------------------------------------------------------------------------------------------------------------------
                                                                                                    (in thousands)
Current Liabilities:
<S>                                                                                            <C>                   <C>
Securities due within one year                                                                 $ 200                 $ 200
Notes payable                                                                                446,485                     -
Notes payable to parent                                                                       32,438               210,488
Accounts payable --
Affiliated                                                                                    18,787                37,748
Other                                                                                          4,813                 4,522
Taxes accrued --
Income taxes                                                                                   5,383                 3,915
Other                                                                                          4,609                 4,313
Interest accrued                                                                               8,095                20,713
Other                                                                                          7,816                 3,484
---------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                    528,626               285,383
---------------------------------------------------------------------------------------------------------------------------
Long-Term Debt:
Senior notes                                                                                 575,000               575,000
Other long-term debt                                                                           8,090               382,089
Unamortized debt (discount) premium, net                                                      (1,190)               (1,210)
---------------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                               581,900               955,879
---------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Obligations under risk management activities                                                  69,295                63,191
Deferred capacity revenues--
Affiliated                                                                                     2,939                13,075
Other                                                                                          1,248                 3,147
Other--
Affiliated                                                                                    15,407                15,644
Other                                                                                          2,568                 3,053
---------------------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities                                                  91,457                98,110
---------------------------------------------------------------------------------------------------------------------------
Common Stockholder's Equity:
Common stock, par value $.01 per share --
  Authorized  - 1,000,000 shares
  Outstanding - 1,000 shares                                                                       -                     -
Paid-in capital                                                                              921,383               731,230
Retained earnings                                                                             85,602                62,477
Accumulated other comprehensive loss                                                         (50,672)              (47,103)
---------------------------------------------------------------------------------------------------------------------------
Total common stockholder's equity                                                            956,313               746,604
---------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity                                               $ 2,158,296           $ 2,085,976
---------------------------------------------------------------------------------====================---===================

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


                                           85
<PAGE>
<TABLE>
<CAPTION>
                             SOUTHERN POWER COMPANY
            CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


                                                                                For the Three Months
                                                                                   Ended March 31,
                                                                              2003                2002
----------------------------------------------------------------------------------------------------------
                                                                                    (in thousands)

<S>                                                                    <C>                  <C>
Net Income                                                             $    23,125          $     4,455
Other comprehensive income (loss):
Changes in fair value of qualifying hedges, net of tax
of $(2,400) and $3,888, respectively                                        (3,833)               6,002
Less: Reclassification adjustment for amounts included in net
income, net of tax of $166                                                     264                    -
-----------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME                                                   $    19,556          $    10,457
===========================================================================================================

</TABLE>



<TABLE>




                             SOUTHERN POWER COMPANY

    CONDENSED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS (UNAUDITED)


                                                               At March 31,               At December 31,
                                                                     2003                       2002
-----------------------------------------------------------------------------------------------------------------
                                                                             (in thousands)

<S>                                                           <C>                         <C>
Balance at beginning of period                                $         (47,103)          $          6,689
Change in current period                                                 (3,569)                   (53,792)
-----------------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD                                      $         (50,672)          $        (47,103)
-------------------------------------------------------------=====================-------====================----





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

</TABLE>

                                       86



<PAGE>


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

                    FIRST QUARTER 2003 vs. FIRST QUARTER 2002


RESULTS OF OPERATIONS

Earnings

Southern Power's net income for first quarter 2003 was $23.1 million compared to
$4.4 million for the corresponding period of 2002. The increase in earnings of
$18.7 million is primarily due to the sale of wholesale capacity and energy to
affiliated and non-affiliated companies. The majority of this income is
attributed to the commercial operation of Plant Wansley Units 6 and 7 and Plant
Franklin Unit 1 beginning in June 2002 along with the initiation of PPAs for
those units with Georgia Power and Savannah Electric. During the first quarter
2002, Southern Power had only one plant (Plant Dahlberg) in commercial
operation.

     Significant income statement items appropriate for discussion include the
following:

                                                      Increase (Decrease)
                                                -------------------------------
                                                         First Quarter
                                                -------------------------------
                                                  (in thousands)          %
Sales for resale - non-affiliates...............   $32,782              187.5
Sales for resale - affiliates...................    53,480              N/M
Fuel expense....................................    18,046              N/M
Purchased power - non-affiliates................    12,209              N/M
Purchased power - affiliates....................    16,562              N/M
Other operation expense.........................     3,719              169.9
Maintenance expense.............................     2,107              N/M
Depreciation and amortization...................     4,543              227.0
Interest expense, net of amounts capitalized....     1,399                -
Other income (expense), net.....................       899              150.8

N/M  Not meaningful.

     Sales for resale to non-affiliates. During the first quarter 2003, these
sales were higher as a result of wholesale capacity and energy sales to
non-affiliates that increased with commercial operation of Plant Franklin Unit 1
and Plant Wansley Units 6 and 7, as well as additional available capacity
arising from new units not yet in commercial operation. The additional
generation provided by the new units that was not required by Georgia Power and
Savannah Electric under long-term PPAs was available for sales to
non-affiliates. The colder than normal weather experienced early in the first
quarter of 2003 contributed to increased demand throughout the Super Southeast.

     Sales for resale to affiliates. Energy and capacity sales through the new
PPAs with Georgia Power and Savannah Electric accounted for most of this
increase from first quarter 2002. Revenues from sales to affiliated companies
through the Southern Company system power pool ("Southern Pool") that are not
covered by PPAs and energy sales under PPAs will vary depending on demand and
the availability and cost of generating resources at each company within the
Southern Pool. These transactions do not have a significant impact on earnings,
since the energy is generally sold at variable cost.

                                       87

<PAGE>


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


     Fuel expense. This increase during the first quarter 2003 is mainly
associated with commercial operation of units at Plant Wansley and Plant
Franklin in June 2002 as compared to the first quarter of 2002, when Southern
Power had only Plant Dahlberg in commercial operation. Plant Dahlberg is
primarily utilized for peak-load conditions, which primarily occur during the
summer months.

     Purchased power from non-affiliates. Purchased power from non-affiliates
increased in the first quarter 2003 to serve the increased requirements under
new PPAs with power purchased at prices lower than Southern Power's
self-generation.

     Purchased power from affiliates. During the first quarter 2003, Southern
Power purchased more power from affiliates mainly due to the availability of
power at prices lower than Southern Power's self-generation. Expenses from
purchased power transactions will vary depending on demand, availability and the
cost of generating resources accessible throughout the Southern Company system.

     Other operation expense. The first quarter 2003 increase in other operation
expense is related to production expenses and administrative and general
expenses resulting from the commercial operation in June 2002 of Plant Wansley
Units 6 and 7 and Plant Franklin Unit 1 when compared to the same period in the
prior year.

     Maintenance expense. The increase in the first quarter 2003 is attributed
to commercial operation of Plant Wansley Units 6 and 7 and Plant Franklin Unit 1
in June 2002.

     Depreciation and amortization. The additional generating units placed into
service in June 2002 are the cause of the increase in depreciation and
amortization during the first quarter 2003 when compared to the corresponding
period in 2002.

     Interest expense, net of amounts capitalized. The increase in interest
expense, net of amounts capitalized during the first quarter 2003 from the same
period in 2002 is primarily related to a decline in the percentage of total
interest expense being capitalized as Southern Power has shifted from
construction mode into construction and operation mode.

     Other income (expense), net. This increase in other income (expense), net
for the first quarter 2003 is attributed to gains on derivative energy
contracts. See "Exposure to Market Risks" below for more information related to
these contracts.

Effects of Inflation

Southern Power is subject to long-term contracts and income tax laws that are
based on the recovery of historical costs. While the inflation rate has been
relatively low in recent years, it continues to have an adverse effect on
Southern Power because of the large investment in generating facilities with
long economic lives. Conventional accounting for historical cost does not
recognize this economic loss nor the partially offsetting gain that arises
through financing facilities with fixed-money obligations such as long-term
debt.

                                       88


<PAGE>


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


Future Earnings Potential

The results of operations are not necessarily indicative of future earnings. The
level of future earnings depends on numerous factors including completion of
construction on new generating facilities, regulatory matters, energy sales,
creditworthiness of customers, total generating capacity available in the Super
Southeast and the remarketing of capacity. For additional information relating
to these issues, see Item 1 - BUSINESS - "Risk Factors" and Item 7 -
MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of Southern
Power in the Form 10-K.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential - General" and to Note 5 to the financial statements
of Southern Power in Item 8 of the Form 10-K for additional information on
long-term power sales agreements and PPAs. Southern Power's PPAs with
non-affiliated counterparties have provisions that require the posting of
collateral or an acceptable substitute guarantee in the event that S&P or
Moody's downgrades the credit ratings of such counterparty to below-investment
grade, or, if the counterparty is not rated, fails to maintain a minimum
coverage ratio. The PPAs are expected to provide Southern Power with a stable
source of revenue during their respective terms.

     In 2003, Southern Power expects Plant Franklin Unit 2, Plant Harris Units 1
and 2 and Plant Stanton A to be completed and placed into commercial operation.
In 2004, Southern Power's PPA with Georgia Power will begin for Plant Harris
Unit 2. PPAs for the other units become effective upon commercial operation.
Southern Power also has Plant Franklin Unit 3 and Plant McIntosh Units 10 and 11
under construction. Reference is made to Note (J) to the Condensed Financial
Statements herein for information regarding the proposed termination of Southern
Power's PPAs with Dynegy. Because of the proposed termination of these PPAs,
Southern Power is exploring several options for its existing capacity and is
also evaluating its construction schedule for Plant Franklin Unit 3 and may
determine to defer or cancel further construction based on forecasted capacity
needs. Reference is also made to Note (L) to the Condensed Financial Statements
herein for information regarding the FERC approval process for Southern Power's
PPAs with Georgia Power and Savannah Electric for Plant McIntosh Units 10 and
11. The final outcome of these matters cannot now be determined.

     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Environmental Matters" of Southern Power in the Form 10-K for information on
the development by federal and state environmental regulatory agencies of
additional control strategies for emission of air pollution from all major
sources of air pollution, particularly electric generating facilities.
Compliance costs related to current and future environmental laws and
regulations could affect earnings if such costs are not fully recovered.

     Southern Power's business activities are subject to extensive governmental
regulation related to public health and the environment. Litigation over
environmental issues and claims of various types, including property damage,
personal injury and citizen enforcement of environmental requirements, has
increased generally throughout the United States; in particular, personal injury
claims for damages caused by alleged exposure to hazardous materials have become
more frequent.

                                       89

<PAGE>


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



     Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
"Future Earnings Potential - FERC Matters" of Southern Power in the Form 10-K
for information on the formation of an RTO as ordered by the FERC and the notice
of proposed rulemaking regarding open access transmission service and standard
electricity market design. In April 2003, the FERC issued a White Paper related
to its proposed rulemaking regarding open access transmission service and
standard electricity market design in an effort to respond to certain of the
public comments received on the standard market design proposal. Evident in the
White Paper are continuing differences in opinion between the FERC and various
state regulatory commissions over questions of jurisdiction and protection of
retail customers. Pending energy legislation may also impact these issues. Any
impact of this proposal on Southern Company and its subsidiaries will depend on
the form in which final rules may be ultimately adopted.

     Reference is also made to Notes (A), (E) and (I) through (L) to the
Condensed Financial Statements herein for discussion of various contingencies
and other matters which may affect future earnings potential.

Accounting Policies

Critical Policies

Southern Power's significant accounting policies are described in Note 1 to the
financial statements of Southern Power in Item 8 of the Form 10-K. Southern
Power has three critical accounting policies that require a significant amount
of judgment and are considered to be the most important to the presentation of
Southern Power's financial position and results of operations. The first
critical policy is the recognition of capacity revenues from long-term contracts
at the lesser of the levelized basis or the cash collected over the contract
periods. Second, Southern Power designates qualifying derivative instruments as
cash flow or fair value hedges and marks such derivative instruments to market
based primarily on quoted market prices. The unrealized changes in fair value of
qualifying cash flow hedges are deferred in other comprehensive income. Any
ineffectiveness in those hedges and changes in non-qualifying positions are
reported as a component of current period income. Finally, Southern Power uses
flow-through accounting for state manufacturer's tax credits. This means that
Southern Power recognizes the credit as a reduction of tax expense when it is
more likely than not to be allowed by the Georgia Department of Revenue.

New Accounting Standards

     Reference is made to Note (H) to the Condensed Financial Statements herein
for information regarding the adoption of FASB Statement No. 143, "Accounting
for Asset Retirement Obligations" effective January 1, 2003. Southern Power has
no liability for asset retirement obligations. Upon adoption, Southern Power
recorded a cumulative effect of change in accounting principle of $0.6 million,
representing previously accrued removal costs.

                                       90
<PAGE>


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


FINANCIAL CONDITION

Overview

The major change in Southern Power's financial condition during the first three
months of 2003 was the addition of approximately $104 million to utility plant
related to on-going construction of Southern Power's combined-cycle units. The
funds for these additions were provided by Southern Power's credit facility,
commercial paper program and subordinated loans from Southern Company. See
Southern Power's Condensed Statements of Cash Flows herein for further details.

Credit Rating Risk

Southern Power does not have any credit agreements that would require material
changes in payment schedules or terminations as a result of a credit rating
downgrade. There are certain physical electricity sale contracts, fixed-price
physical gas purchases and agreements covering interest rate swaps and currency
swaps that could require collateral -- but not accelerated payment -- in the
event of a credit rating change to below investment grade. Generally, collateral
may be provided for by a Southern Company guaranty, letter of credit or cash. At
March 31, 2003, the maximum potential collateral requirements under the
electricity sale contracts and financial instrument agreements were
approximately $197 million. At March 31, 2003, there were no material collateral
requirements for the gas purchase contracts.

Exposure to Market Risks

Southern Power is exposed to market risks,  including changes in interest rates,
currency  exchange rates and certain  commodity prices. To manage the volatility
attributable  to these  exposures,  Southern  Power  nets the  exposure  to take
advantage of natural offsets and enters into various derivative transactions for
the remaining  exposure  pursuant to approved risk management  policies in areas
such as counterparty exposure and hedging practices.  Southern Power's policy is
that  derivatives  are to be used  primarily  for hedging  purposes.  Derivative
positions are  monitored  using  techniques  that include  market  valuation and
sensitivity analysis.

     Southern Power has no outstanding variable rate long-term debt. To mitigate
Southern Power's exposure to interest rates, it has entered into interest rate
swaps that were designated as cash flow hedges of 2003 planned debt issuances.
Changes in the fair values of these swaps are deferred in Other Comprehensive
Income. The swaps will settle upon the issuance of the debt and will be
amortized to expense over the appropriate periods. (See Note (I) to the
Condensed Financial Statements herein for additional information.) Based on
Southern Power's overall interest rate exposure at March 31, 2003, including
derivative and other interest-rate sensitive instruments, a near-term 100
basis-point change in interest rates would not materially affect Southern
Power's financial statements. In addition, Southern Power is not aware of any
facts or circumstances that would significantly affect such exposures in the
near term.


                                       91
<PAGE>


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


     Because energy from Southern Power's facilities is primarily sold under
long-term contracts with tolling agreements and provisions shifting
substantially all of the responsibility for fuel cost to the PPA counterparties,
Southern Power's exposure to market volatility in commodity fuel prices and
prices of electricity is limited. To mitigate residual risks in those areas,
Southern Power enters into fixed-price contracts for the purchase or sale of
fuel and electricity. In connection with the transfers of Plant Franklin in 2001
and Plant Wansley in 2002 to Southern Power, Georgia Power transferred
approximately $5.6 million and $1.6 million, respectively, in derivative assets
relating to electric and gas forward contracts in effect at the date of the
transfers. These contracts were recorded at fair value on the date of the
transfer, which was equal to Georgia Power's carrying amount. Following the
transfer, these contracts are marked to market through income until realized and
settled.

     Southern Power has firm purchase commitments that require payment in Euros.
As a hedge against fluctuations in the exchange rate for Euros, Southern Power
entered into forward contracts to purchase Euros and has designated these
contracts as fair value hedges of an unrecognized firm commitment. Since the
terms of these Euro contracts mirror the purchase commitment terms, there is no
ineffectiveness recognized in income. At March 31, 2003, Southern Power had
outstanding contracts covering a notional amount of $1.6 million in commitments
through May 2003.

     Unrealized gains and losses on electric and gas contracts used to hedge
anticipated purchases and sales are deferred in Other Comprehensive Income.
Gains and losses on contracts that do not represent hedges are recognized in the
Statements of Income as incurred. The fair values of derivative energy contracts
at March 31, 2003 were as follows:

                                                   First Quarter
                                                        2003
                                                      Changes
     --------------------------------------- -------------------------
                                                  Fair Value
     --------------------------------------- -------------------------
                                                (in thousands)
     Contracts beginning of period                    $3,864
     Contracts realized or settled                      (665)
     New contracts at inception                            -
     Changes in valuation techniques                       -
     Current period changes                           (1,324)
     --------------------------------------- -------------------------
     Contracts at March 31, 2003                      $1,875
     ======================================= =========================

     At March 31, 2003, all of these contracts are based on actively quoted
market prices. Realized gains and losses on hedged transactions are recognized
in revenues and/or fuel expense in the Statements of Income as incurred. For the
three month periods ended March 31, 2003 and 2002, approximately $0.3 million of
gains and $1.3 million of losses, respectively, were recognized in Other Income
in the Statements of Income.



                                       92


<PAGE>


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


Financing Activities

During the first three months of 2003, Southern Company made subordinated loans
to Southern Power of approximately $12 million. In March 2003, $190 million of
notes payable to Southern Company were converted to a capital contribution from
Southern Company. Equity contributions and subordinated loans from Southern
Company are projected to total approximately $813 million to Southern Power by
the end of 2003. No dividends are projected to be paid in 2003. These
projections are contingent upon FERC approval of the Plant McIntosh PPAs.
Reference is also made to Note (L) to the Condensed Financial Statements herein
for information regarding the FERC approval process for Southern Power's PPAs
with Georgia Power and Savannah Electric for Plant McIntosh Units 10 and 11.


Capital Requirements

Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Capital
Requirements for Construction" and "Other Capital Requirements" of Southern
Power in the Form 10-K for a description of Southern Power's capital
requirements for its construction program, maturing debt, purchase commitments
and long-term service agreements.

Sources of Capital

To meet short-term cash needs and contingencies, Southern Power had at March 31,
2003 approximately $2.7 million of cash and cash equivalents. To meet liquidity
and capital resource requirements, Southern Power had at March 31, 2003
approximately $850 million of unused committed credit arrangements with banks
expiring in 2004. Effective April 2003, the credit facility for Southern Power
was reduced to $650 million to reflect lower short-term borrowing needs. The
facility was extended to April 2006. This line also provides liquidity support
for Southern Power's commercial paper program (as discussed below). Amounts
drawn under the arrangements are used to finance acquisition and construction
costs related to gas-fired electric generating facilities and for general
corporate purposes, subject to borrowing limitations for each generating
facility. The arrangements permit Southern Power to fund construction of future
generating facilities upon meeting certain requirements.

     Southern Power's current liabilities exceed current assets because of the
continued use of short-term debt as a funding source to meet cash needs.

     In February 2003, Southern Power initiated a commercial paper program to
fund a portion of the construction costs of new generating facilities. Southern
Power's strategy is to refinance most of such short-term borrowings with
long-term securities following commercial operation. The amount of commercial
paper will initially represent about 45% of total debt, but is forecasted to
decline to about 7% at year-end 2005 as more construction projects are completed
and refinanced with long-term securities. At March 31, 2003, Southern Power had
outstanding $446.5 million in commercial paper. Reference is made to Note 7 to
the financial statements of Southern Power in Item 8 of the Form 10-K for
additional information relating to the commercial paper program.




                                       93
<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
                             SOUTHERN POWER COMPANY


                          INDEX TO APPLICABLE NOTES TO
                       FINANCIAL STATEMENTS BY REGISTRANT


                  Registrant                   Applicable Notes

                  Southern Company             A, B, C, D, E, F, G, H, I, J, N

                  Alabama Power                A, E, F, H, I

                  Georgia Power                A, E, F, G, H, I, K, L

                  Gulf Power                   A, E, F, G, H

                  Mississippi Power            A, E, F, G, H, J, M

                  Savannah Electric            A, E, F, H, L

                  Southern Power               A, E, H, I, J, K, L

                                       94
<PAGE>
                  THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
                              ALABAMA POWER COMPANY
                              GEORGIA POWER COMPANY
                               GULF POWER COMPANY
                            MISSISSIPPI POWER COMPANY
                       SAVANNAH ELECTRIC AND POWER COMPANY
                             SOUTHERN 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 of operations for the
     periods  ended March 31, 2003 and 2002.  Certain  information  and footnote
     disclosures   normally  included  in  financial   statements   prepared  in
     accordance  with  accounting  principles  generally  accepted in the United
     States  have  been  condensed  or  omitted   pursuant  to  such  rules  and
     regulations,   although  each  registrant  believes  that  the  disclosures
     regarding such  registrant are adequate to make the  information  presented
     not  misleading.   Disclosure  which  would  substantially   duplicate  the
     disclosure   in  the  Form  10-K  and   details   which  have  not  changed
     significantly  in amount or  composition  since the filing of the Form 10-K
     are omitted  from this Form 10-Q.  Therefore,  it is  suggested  that these
     condensed  financial  statements be read in conjunction  with the financial
     statements and the notes thereto  included in the Form 10-K.  Certain prior
     period  amounts  have  been  reclassified  to  conform  to  current  period
     presentation.  Due  to  seasonal  variations  in  the  demand  for  energy,
     operating  results for the periods  presented do not  necessarily  indicate
     operating results for the entire year.

(B)  Reference is made to Note 11 to the financial statements of Southern
     Company in Item 8 and MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future
     Earnings Potential - General" of Southern Company in Item 7 of the Form
     10-K for information on the spin off of Mirant from Southern Company.

     On April 30, 2003, Mirant filed its Annual Report on Form 10-K for the
     year ended December 31, 2002. This filing included Mirant's restated
     financial statements for the years ended December 31, 2001 and 2000.
     Mirant's restated net income for 2001 and 2000 decreased by $159
     million and $29 million, respectively. Mirant also announced that it is
     preparing revised quarterly financial statements for 2001 and expects
     to provide the quarterly results as soon as possible. Southern Company
     owned 100% of Mirant through September 2000 and 80% between October
     2000 and April 2, 2001. Due to Southern Company's spin-off of Mirant on
     April 2, 2001, Southern Company's financial statements reflect its
     share of Mirant's net income as discontinued operations. The effect of
     these restatements on Southern Company's financial statements, if any,
     cannot be determined until Mirant's 2001 revised quarterly financial
     statements are filed.

(C)  Reference is made to Note 1 "Leveraged Leases" and Note 6 to the
     financial statements of Southern Company in Item 8 and MANAGEMENT'S
     DISCUSSION AND ANALYSIS - "Future Earnings Potential - General" in Item
     7 of the Form 10-K.

     As a large corporate taxpayer, Southern Company undergoes audits by the
     IRS for each of its tax years. The IRS has completed its audits of
     Southern Company's consolidated federal income tax returns for all
     years through 1999. As part of the audit for the 1996-1999 tax years,
     the IRS reviewed Southern Company's four international leveraged lease
     transactions. Based on its review, the IRS proposed to

                                       95
<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)


         disallow the tax losses associated with one of these transactions,
         resulting in an additional tax payment of approximately $30 million,
         including interest, to the IRS. To finalize the audit and eliminate any
         additional interest charges, Southern Company made this payment to the
         IRS in May 2003 and intends to pursue a refund claim for this amount.
         Notwithstanding the position taken by the IRS, Southern Company
         continues to believe that the transaction remains a valid lease for
         U.S. tax purposes and, accordingly, will vigorously contest the
         proposed disallowance. Southern Company has accounted for the payment
         as a deposit.

         If Southern Company is not successful in its defense of the tax
         treatment for this transaction, it would also affect the timing of the
         related revenue recognition for book purposes. A cumulative effect
         adjustment would be required to reduce net income based on the revised
         cash flows as a result of the changes in the allowed tax deductions.

         The IRS did not disallow any tax losses or make any other adjustments
         for the 1996-1999 period with respect to any of Southern Company's
         other lease transactions. However, there can be no assurance that
         subsequent IRS audits would not raise similar disallowance issues.

         The ultimate outcome of these matters cannot now be determined.

(D)      Reference is made to Note 9 under "Guarantees" to the financial
         statements of Southern Company in Item 8 of the Form 10-K for
         information regarding Southern Company's guarantees of contractual
         commitments made by Mirant's trading and marketing subsidiaries. At
         March 31, 2003, the total notional amount of guarantees was $29
         million, all of which will expire by 2007. The estimated fair value of
         net contractual commitments outstanding was approximately $16.4 million
         at March 31, 2003. Southern Company's potential exposure under these
         contractual commitments is not expected to materially differ from the
         estimated fair value.

(E)      Reference is made to Note 3 to the financial statements of Southern
         Company, the operating companies and Southern Power in Item 8 and to
         "Legal Proceedings" in Item 3 of the Form 10-K for information relating
         to various lawsuits.

         On April 17, 2003, a retired employee of Mirant filed a complaint in
         the United States District Court for the Northern District of Georgia
         alleging violations of the Employee Retirement Income Security Act and
         naming as defendants Mirant, Southern Company, several current and
         former directors and officers of Mirant and/or Southern Company, and
         "Unknown Fiduciary Defendants 1-100." The plaintiff seeks to represent
         a purported class consisting of individuals who were participants in or
         beneficiaries of two Mirant employee plans and their predecessor plans
         (the "Plans") at any time between January 1, 2000 and the filing of the
         complaint whose plan accounts included investments in Mirant common
         stock or the "Mirant Corporation Stock Fund." The complaint alleges
         that the defendants misled participants in the Plans by concealing
         Mirant's alleged "participation in the illegal manipulation of energy
         prices in California during 2000 and 2001 as well as other irregular
         and unlawful accounting manipulations tied to energy trading." The
         complaint does not contain any specific allegations of wrongdoing with
         respect to Southern Company. Southern Company denies any wrongdoing and
         intends vigorously to defend this action. The final outcome of this
         matter cannot now be determined.

                                       96


<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)


     Reference is made to Note 3 under "Race Discrimination Litigation" of
     Southern Company and Georgia Power in Item 8 of the Form 10-K. On March
     31, 2003, the United States District Court for the Northern District of
     Georgia granted summary judgment in favor of the defendants on all
     claims raised by all seven of the named plaintiffs. On April 28, 2003,
     plaintiffs filed an appeal to the United States Court of Appeals for
     the Eleventh Circuit challenging these adverse summary judgment
     rulings, as well as the court's October 2001 ruling denying class
     certification. In addition, plaintiffs appealed some adverse rulings on
     discovery issues. The court has not yet set a briefing schedule on the
     appeal. The final outcome of the case cannot now be determined.

(F)  Reference is made to Note 1 under "Regulatory Assets and Liabilities"
     to the financial statements of Southern Company and each of the
     operating companies in Item 8 of the Form 10-K. The operating companies
     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
     regulatory assets and liabilities that are not specifically recoverable
     and determine if any other assets have been impaired.

(G)  Reference is made to Note 9, Note 4 and Note 4 under "Guarantees" to
     the financial statements of Southern Company, Georgia Power and Gulf
     Power, respectively, in Item 8 of the Form 10-K for information
     regarding guarantees of loans to residential customers for heat pump
     purchases. As of March 31, 2003, the total outstanding loans guaranteed
     by all of the operating companies were $16.1 million, of which Georgia
     Power is responsible for $13.0 million and Gulf Power is responsible
     for $1.0 million. Total loan loss reserves of $3.6 million ($2.8
     million for Georgia Power and $0.2 million for Gulf Power) have been
     recorded.

(H)  Effective January 1, 2003, Southern Company adopted FASB Statement No. 143,
     "Accounting   for  Asset   Retirement   Obligations".   Statement  No.  143
     establishes  new accounting and reporting  standards for legal  obligations
     associated  with the  ultimate  cost of  retiring  long-lived  assets.  The
     ultimate  costs for an asset's  future  retirement  must be recorded in the
     period in which the liability is incurred.  The cost must be capitalized as
     part of the  related  long-lived  asset and  depreciated  over the  asset's
     useful life. Additionally,  Statement No. 143 does not permit the continued
     accrual  of  future  retirement  costs for  long-lived  assets in which the
     company does not have a legal obligation to retire.  However, the operating
     companies have discussed the financial  statement  impacts of Statement No.
     143  with  their  respective  PSCs  and  will  continue  to  recognize  the
     accumulated  removal costs for other obligations as part of the accumulated
     depreciation  and  amortization  reserve.  As of March  31,  2003,  amounts
     recorded in Accumulated  Depreciation that represent regulatory liabilities
     related to such  removal  costs  totaled $1.2  billion  consisting  of $554
     million,  $417  million,  $144  million,  $73  million  and $33 million for
     Alabama Power,  Georgia Power,  Gulf Power,  Mississippi Power and Savannah
     Electric, respectively.

     The operating companies had no cumulative effect to net income
     resulting from the adoption of Statement No. 143. As a result, Alabama
     Power, Georgia Power, Gulf Power, Mississippi Power and Savannah
     Electric recorded regulatory assets (liabilities) of $(71) million, $21
     million, $0.9 million, $0.6 million and $2.4 million, respectively, as
     of January 1, 2003. At March 31, 2003, the regulatory liability for
     Alabama Power is reflected in the balance sheets under "Asset
     retirement obligation regulatory liability." The regulatory assets of
     the other operating companies are reflected in the balance sheets under
     either "Asset retirement obligation regulatory asset" or in "Other"
     under "Deferred Charges and Other Assets." Southern Power recorded a
     cumulative effect adjustment to income upon adoption of $0.6 million,
     representing removal costs previously accrued.

                                       97

<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)


         The liability recognized to retire long-lived assets primarily relates
         to Southern Company's nuclear facilities, which include Alabama Power's
         Plant Farley and Georgia Power's ownership interests in Plants Hatch
         and Vogtle. The fair value of assets legally restricted for settling
         retirement obligations related to these assets is $300 million, $355
         million and $655 million for Alabama Power, Georgia Power and Southern
         Company, respectively. In addition, the operating companies have
         retirement obligations related to various landfill sites, ash ponds and
         underground storage tanks. The operating companies have also identified
         retirement obligations related to certain transmission and distribution
         facilities. However, liabilities for the removal of these transmission
         and distribution assets will not be recorded because no reasonable
         estimate can be made regarding the timing of the obligations. The
         operating companies will continue to recognize in the income statement
         their ultimate removal costs in accordance with each company's
         respective regulatory treatment. Any difference between costs
         recognized under Statement No. 143 and those reflected in rates will be
         recognized as either a regulatory asset or liability.

         The following table reflects the details of the Asset Retirement
                Obligations included in the balance sheets.
<TABLE>
<CAPTION>

                                    Balance at    Liabilities    Liabilities                     Cash Flow      Balance at
                                     12/31/02     Incurred         Settled        Accretion      Revisions        3/31/03
                                     --------     --------         -------        ---------      ---------        -------
                                                                (in millions)
<S>                                  <C>             <C>           <C>            <C>              <C>             <C>
         Alabama Power               $   -           $301.0        $  -           $  5.2           $ -             $306.2
         Georgia Power                   -            469.1           -              7.6             -              476.7
         Gulf Power                      -              4.0           -               .1             -                4.1
         Mississippi Power               -              1.0           -                -             -                1.0
         Savannah Electric               -              3.2           -               .1             -                3.3

         Southern Company            $   -           $778.3        $  -            $13.0           $ -             $791.3
</TABLE>

         The following table represents pro-forma asset retirement obligations
         as if Statement No. 143 had been adopted on January 1, 2002.

                                              At December 31,
                                     -----------------------------------
                                      2002                          2001
                                      ----                          ----
                                               (in millions)
         Alabama Power                 $301.0                    $281.3
         Georgia Power                  469.1                     440.1
         Gulf Power                       4.0                       3.7
         Mississippi Power                1.0                        .9
         Savannah Electric                3.2                       2.7

         Southern Company              $778.3                    $728.7

         The adoption of FASB Statement No. 143 has been treated as a non-cash
         transaction for purposes of the Statements of Cash Flows.

                                       98
<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)


(I)      In addition to the fixed price electric and gas contracts used to
         mitigate exposure to volatile energy prices (see "Exposure to Market
         Risks" in MANAGEMENT'S DISCUSSION AND ANALYSIS herein), Southern
         Company and certain of its subsidiaries enter into interest rate swaps
         to hedge exposure to interest rate changes. Swaps related to fixed rate
         securities are accounted for as fair value hedges; swaps related to
         variable rate securities or forecasted transactions are accounted for
         as cash flow hedges. The swaps are generally structured to mirror the
         terms of the hedged debt instruments; therefore, no material
         ineffectiveness has been recorded in earnings. As of March 31, 2003,
         the following swaps were outstanding:
<TABLE>
<CAPTION>

         Fair Value Hedges

                                  --------------- -------------- ------------------ ---------------- --------------------------
                                     Notional      Fixed Rate      Variable Rate       Maturity             Fair Value
                                      Amount        Received           Paid              Date             March 31, 2003
         ------------------------ --------------- -------------- ------------------ ---------------- --------------------------

         Southern Company         $400 million         5.3%      6-month LIBOR      February 2007            $35.3 million
                                                                 less 0.103%
         Cash Flow Hedges

                                 ---------------- -------------- ------------------ ----------------- --------------------
                                                                   Weighted
                                                    Variable       Average
                                    Notional         Rate         Fixed Rate             Maturity           Fair Value
                                     Amount        Received         Paid                  Date            March 31, 2003
         ----------------------- ---------------- -------------- ------------------ ----------------- --------------------

<S>                              <C>              <C>                                    <C>              <C>
         Southern Company        $400 million;    1-month LIBOR                     June 2003;            $ (5.4 million)
                                 $200 million                    3.1975%            June 2004

         Alabama Power           $350 million     3-month        3.015%             December 2003         $ (4.5 million)
                                                  LIBOR plus
                                                  0.12%

         Alabama Power           $486 million     BMA Index      1.6254%            January 2004          $ (2.0 million)

         Alabama Power           $250 million     3-month LIBOR  3.967%             May 2008              $ (8.5 million)

         Georgia Power           $250 million     3-month LIBOR  4.762%             May 2013              $ (8.3 million)

         Georgia Power           $250 million     3-month        1.96%              February 2005         $ (0.9 million)
                                                  LIBOR plus
                                                  0.125%

         Southern Power          $350 million     1-month LIBOR  6.2348%            June 2013             $(54.4 million)

         Southern Power          $150 million     1-month LIBOR  5.4792%            June 2008             $(14.9 million)
</TABLE>

(J)      Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS -
         "Future Earnings Potential - General" and to Note 5 to the financial
         statements in Item 8 of the Form 10-K for Southern Company, Mississippi
         Power and Southern Power for information regarding PPAs between
         subsidiaries of Dynegy and Mississippi Power and Southern Power and
         related letters of credit. The Dynegy letter of credit in favor of
         Mississippi Power related to Plant Daniel was extended to June 20,
         2003. The Dynegy letter of credit in favor of Southern Power related to
         Plant Dahlberg was extended to June 20, 2003 and those related to Plant
         Franklin were extended to April 28, 2004.


                                       99
<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)


         On April 21, 2003, Mississippi Power and Southern Power entered into a
         letter agreement with Dynegy (the "Letter Agreement") to resolve all
         outstanding matters related to Dynegy and the PPAs. Under the terms of
         the Letter Agreement, (1) Dynegy would make a one-time cash payment of
         $75 million to Mississippi Power and $80 million to Southern Power upon
         the execution of a definitive agreement and related documentation (the
         "Closing"); (2) the PPAs between Southern Power and Dynegy relating to
         Plant Dahlberg and Plant Franklin would be terminated upon the Closing,
         with no party to have any remaining obligations under such PPAs after
         the Closing; (3) at the Closing, Dynegy and Mississippi Power would
         amend the PPA relating to Plant Daniel so that the capacity payments
         due from Dynegy to Mississippi Power would be reduced to zero for each
         month from June 2003 through October 2003 (but other obligations and
         payments by Dynegy under such PPA would not be affected during such
         time) and such PPA would terminate effective October 31, 2003, with
         neither party having any remaining obligations under such PPA after
         October 31, 2003; and (4) at the Closing, upon receipt of the cash
         payment from Dynegy, Southern Power would return the existing letters
         of credit in favor of Southern Power in support of Dynegy's obligations
         under the PPAs relating to Plant Dahlberg and Plant Franklin. The
         parties have also agreed that a letter of credit in support of Dynegy's
         continuing obligations under the PPA related to Plant Daniel would be
         maintained for any amounts owed by Dynegy to Mississippi Power under
         the PPA related to Plant Daniel. Mississippi Power, Southern Power and
         Dynegy agreed to use their best efforts to complete and execute
         definitive documentation reflecting the terms of the Letter Agreement
         by May 30, 2003.

         The termination payments from Dynegy would result in a one-time gain
         upon the Closing to Southern Company of approximately $88 million after
         tax ($38 million for Mississippi Power and $50 million for Southern
         Power). Additionally, Mississippi Power would recognize capacity
         revenues totaling approximately $8.8 million for the period from June
         through October. Under the original terms of the PPAs, Mississippi
         Power and Southern Power would have recognized revenue of approximately
         $1.8 million and $5.9 million, respectively, for the remaining period
         of 2003 following the proposed terminations.

         Because of the proposed termination of these PPAs, Mississippi Power
         and Southern Power are exploring several options for their existing
         capacity and Southern Power is evaluating its construction schedule for
         Plant Franklin Unit 3 and may determine to defer or cancel further
         construction based on forecasted capacity needs.

         The final outcome of these matters cannot now be determined.

(K)      Reference is made to Note 3 to the financial statements under
         "Construction Program" of Southern Power and to Note 4 to the financial
         statements under "Construction Program" of Georgia Power in Item 8 of
         the Form 10-K for information regarding Southern Company keep-wells
         covering the transfer of specific vendor contracts from Georgia Power
         to Southern Power for the operation of Plant Dahlberg and construction
         at the Plant Franklin and Plant Stanton sites. As of March 31, 2003,
         Southern Power has no remaining purchase obligations to equipment
         vendors under these contracts.


                                      100
<PAGE>


NOTES TO THE CONDENSED FINANCIAL STATEMENTS:  (Continued)


(L)  Reference  is  made to  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  -  "Future
     Earnings  Potential - General" in Item 7 and Note 4 under  "Purchased Power
     Commitments"  and "Fuel and Purchased  Power  Commitments" to the financial
     statements of Georgia Power and Savannah Electric, respectively, and Note 5
     to the financial  statements  of Southern  Power in Item 8 of the Form 10-K
     for information regarding PPAs between Southern Power and Georgia Power and
     Savannah Electric for Plant McIntosh capacity.  Such PPAs were certified by
     the Georgia PSC in December 2002. In April 2003, Southern Power applied for
     FERC  approval of these PPAs.  The Electric  Power Supply  Association  and
     Calpine  Corporation  have made filings in this proceeding in opposition to
     the FERC's  acceptance of the PPAs,  alleging that the PPAs do not meet the
     applicable  standards for PPAs between affiliates.  Management believes the
     allegations are  without merit and that the  PPAs should be approved by the
     FERC;however, the ultimate outcome of this matter cannot now be determined.

(M)  Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future
     Earnings Potential - FERC Matters" in Item 7 and Note 3 under
     "Transmission Facilities Agreement" to the financial statements of
     Mississippi Power in Item 8 of the Form 10-K for information regarding
     the FERC's investigation related to a transmission facilities agreement
     with Entergy Corp. On April 30, 2003, Mississippi Power filed an offer
     of settlement with the FERC. The proposed settlement, which is pending
     approval by the FERC, would have no material impact on Mississippi
     Power's financial statements; however, the ultimate outcome of this
     matter cannot now be determined.

(N)  Southern Company's reportable business segment is the sale of
     electricity in the Southeast by the operating companies and
     Southern Power. The All Other category includes parent Southern
     Company, which does not allocate operating expenses to business
     segments, and segments below the quantitative threshold for separate
     disclosure. These segments include telecommunications, energy products
     and services, and leasing and financing services. Intersegment revenues
     are not material. Financial data for business segments for the periods
     covered in the Form 10-Q are as follows:
<TABLE>
<CAPTION>


                                                             Electric     All            Reconciling
                                                             Utilities    Other          Eliminations     Consolidated
         --------------------------------------------------- --------------------------------------------------------------
                                                                                     (in millions)
         Three Months Ended March 31, 2003:
<S>                                                           <C>           <C>            <C>              <C>
           Operating revenues                                 $   2,405     $    153       $      (5)       $   2,553
           Segment net income (loss)                                287           11               -              298
         Total assets at March 31, 2003                         $31,401     $  1,809       $    (360)         $32,850
         --------------------------------------------------- ------------- ------------- ---------------- -----------------

         Three Months Ended March 31, 2002:
           Operating revenues                                 $   2,140     $     77       $      (3)         $  2,214
           Segment net income (loss)                                232           (8)              -               224
         Total assets at December 31, 2002                      $30,409       $1,881       $    (491)          $31,799
         --------------------------------------------------- ------------- ------------- ---------------- -----------------


</TABLE>


                                      101



<PAGE>



PART II  -OTHER INFORMATION

Item 1.           Legal Proceedings.


                  Reference is made to the "Notes to the Condensed Financial
                  Statements" herein for information regarding certain legal and
                  administrative proceedings in which Southern Company and its
                  reporting subsidiaries are involved.

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

(a)      Exhibits.
         --------

(3)      Articles of Incorporation and By-Laws

         Alabama Power

           <S>            <C>
           (b)  1       - Amendment to Charter of Alabama Power dated April 25, 2003.

           (b)  2       - By-Laws of Alabama Power as amended effective April 25, 2003, and as presently in effect.

(10)     Material Contracts

         Southern Company

           (a)  1       - Amended and Restated Credit Agreement among Southern Power, Citibank N.A., as the administrative agent,
                          and the lenders listed therein dated as of April 17, 2003.

           (a)  2       - Letter Amendment No. 1 to Completion Guarantee among Southern Company, Southern Power and Citibank, N.A.
                          in its capacity as agent for the Lenders under the Credit Facility dated as of April 17, 2003.

           (a)  3       - Letter Amendment No. 1 to Equity Contribution Agreement among Southern Company, Southern Power and
                          Citibank, N.A. in its capacity as agent for the Lenders under the Credit Facility dated as of April 17,
                          2003.

         Alabama Power

           (b)  1       - Deferred Compensation Agreement between Alabama Power and William B. Hutchins III dated April 11, 2003.

         Southern Power

           (a)  1       - Amended and Restated Credit Agreement among Southern Power, Citibank N.A., as the administrative agent,
                          and the lenders listed therein dated as of April 17, 2003. (See Exhibit 10(a)1 herein)

                                      102
<PAGE>


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

(a)      Exhibits. (Continued)
         --------

           (a)  2       - Letter Amendment No. 1 to Completion Guarantee among Southern Company, Southern Power and Citibank, N.A.
                          in its capacity as agent for the Lenders under the Credit Facility dated as of April 17, 2003. (See
                          Exhibit 10(a)2 herein)

           (a)  3       - Letter Amendment No. 1 to Equity Contribution Agreement among Southern Company, Southern Power and
                          Citibank, N.A. in its capacity as agent for the Lenders under the Credit Facility dated as of April 17,
                          2003. (See Exhibit 10(a)3 herein)

(24)     Power of Attorney and Resolutions

         Southern Company

           (a)  1       - Power of Attorney and resolution.  (Designated in the Form 10-K for the year ended December 31, 2002,
                          File No. 1-3526 as Exhibit 24(a) and incorporated herein by reference.)

           (a)  2       - Power of Attorney for Thomas A. Fanning.

         Alabama Power

           (b)  1       - Power of Attorney and resolution.  (Designated in the Form 10-K for the year ended December 31, 2002,
                          File No. 1-3164 as Exhibit 24(b) and incorporated herein by reference.)

         Georgia Power

           (c)  1       - Power of Attorney and resolution.  (Designated in the Form 10-K for the year ended December 31, 2002,
                          File No. 1-6468 as Exhibit 24(c) and incorporated herein by reference.)

         Gulf Power

           (d)  1       - Power of Attorney and resolution.  (Designated in the Form 10-K for the year ended December 31, 2002,
                          File No. 0-2429 as Exhibit 24(d) and incorporated herein by reference.)

           (d)  2       - Power of Attorney for Susan N. Story.

         Mississippi Power

           (e)  1       - Power of Attorney and resolution.  (Designated in the Form 10-K for the year ended December 31, 2002,
                          File No. 001-11229 as Exhibit 24(e) and incorporated herein by reference.)

                                      103
<PAGE>


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

(a)      Exhibits. (Continued)
         --------

         Savannah Electric

           (f)  1       - Power of Attorney and resolution.  (Designated in the Form 10-K for the year ended December 31, 2002,
                          File No. 1-5072 as Exhibit 24(f) and incorporated herein by reference.)

         Southern Power

           (g)  1       - Power of Attorney and resolution.  (Designated in the Form 10-K for the year ended December 31, 2002,
                          File No. 333-98553 as Exhibit 24(g) and incorporated herein by reference.)

(99)     Section 906 Certifications

         Southern Company

           (a)  1       - Certificate of Southern Company's Chief Executive Officer required by Section 906 of the Sarbanes-Oxley
                          Act of 2002.

           (a)  2       - Certificate of Southern Company's Chief Financial Officer required by Section 906 of the Sarbanes-Oxley
                          Act of 2002.

         Alabama Power

           (b)  1       - Certificate of Alabama Power's Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act
                          of 2002.

           (b)  2       - Certificate of Alabama Power's Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act
                          of 2002.

         Georgia Power

           (c)  1       - Certificate of Georgia Power's Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act
                          of 2002.

           (c)  2       - Certificate of Georgia Power's Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act
                          of 2002.

         Gulf Power

           (d)  1       - Certificate of Gulf Power's Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act of
                          2002.


                                      104
<PAGE>


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

(a)      Exhibits. (Continued)
         --------

           (d)  2       - Certificate of Gulf Power's Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of
                          2002.

         Mississippi Power

           (e)  1       - Certificate of Mississippi Power's Chief Executive Officer required by Section 906 of the Sarbanes-Oxley
                          Act of 2002.

           (e)  2       - Certificate of Mississippi Power's Chief Financial Officer required by Section 906 of the Sarbanes-Oxley
                          Act of 2002.

         Savannah Electric

           (f)  1       - Certificate of Savannah Electric's Chief Executive Officer required by Section 906 of the Sarbanes-Oxley
                          Act of 2002.

           (f)  2       - Certificate of Savannah Electric's Chief Financial Officer required by Section 906 of the Sarbanes-Oxley
                          Act of 2002.

         Southern Power

           (g)  1       - Certificate of Southern Power's Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act
                           of 2002.

           (g)  2       - Certificate of Southern Power's Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act
                           of 2002.
</TABLE>

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

                        Alabama Power filed Current Reports on Form 8-K dated
                        February 5, 2003, February 11, 2003 and March 12, 2003:
                              Item reported:                     Items 5 and 7
                              Financial statements filed:        None

                        Georgia Power filed Current Reports on Form 8-K dated
                        February 13, 2003 and February 21, 2003:
                              Item reported:                     Items 5 and 7
                              Financial statements filed:        None

                        Gulf Power filed a Current Report on Form 8-K dated
                        March 21, 2003:
                              Item reported:                     Items 5 and 7
                              Financial statements filed:        None


                                      105

<PAGE>



                              THE SOUTHERN COMPANY

                                   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   Allen Franklin
          Chairman and Chief Executive Officer
          (Principal Executive Officer)

     By   Thomas A. Fanning
          Executive Vice President, Chief Financial Officer and Treasurer
          (Principal Financial Officer)

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

                                                          Date:  May 13, 2003

                                      106
<PAGE>


                              THE SOUTHERN COMPANY
            Certification Of Chief Executive Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Allen Franklin, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of The Southern Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors any
         material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  May 13, 2003
                              /s/ H. Allen Franklin
                                 Allen Franklin
                      Chairman and Chief Executive Officer

                                      107
<PAGE>


                              THE SOUTHERN COMPANY
            Certification Of Chief Financial Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Thomas A. Fanning, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of The Southern Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's
         ability to record, process, summarize and report financial data and
         have identified for the registrant's auditors any material weaknesses
         in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  May 13, 2003
                               /s/ Thomas A. Fanning
                                Thomas A. Fanning
         Executive Vice President, Chief Financial Officer and Treasurer

                                      108
<PAGE>


                              ALABAMA POWER COMPANY

                                   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.

          ALABAMA POWER COMPANY

     By   Charles D. McCrary
          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, 2003

                                      109
<PAGE>


                              ALABAMA POWER COMPANY
            Certification Of Chief Executive Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Charles D. McCrary, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Alabama Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                              /s/  Charles D. McCrary
                       -------------------------------------
                               Charles D. McCrary
                      President and Chief Executive Officer


                                      110

<PAGE>


                              ALABAMA POWER COMPANY
            Certification Of Chief Financial Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, William B. Hutchins, III, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Alabama Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                         /s/  William B. Hutchins, III
                 ---------------------------------------------
                            William B. Hutchins, III
         Executive Vice President, Chief Financial Officer and Treasurer

                                      111
<PAGE>


                              GEORGIA POWER COMPANY

                                   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   David M. Ratcliffe
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   Allen L. Leverett
          Executive Vice President, Chief Financial Officer and Treasurer
          (Principal Financial Officer)

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


                                                            Date:  May 13, 2003

                                      112
<PAGE>


                              GEORGIA POWER COMPANY
            Certification Of Chief Executive Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, David M. Ratcliffe, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Georgia Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                             /s/ David M. Ratcliffe
                               David M. Ratcliffe
                      President and Chief Executive Officer

                                      113
<PAGE>


                              GEORGIA POWER COMPANY
            Certification Of Chief Financial Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Allen L. Leverett, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Georgia Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                              /s/ Allen L. Leverett
                                Allen L. Leverett
         Executive Vice President, Chief Financial Officer and Treasurer


                                      114
<PAGE>


                               GULF POWER COMPANY

                                   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.

          GULF POWER COMPANY

     By   Susan N. Story
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   Ronnie R. Labrato
          Vice President, Chief Financial Officer and Comptroller
          (Principal Financial and Accounting Officer)

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


                                                            Date:  May 13, 2003
                                      115

<PAGE>


                               GULF POWER COMPANY
            Certification Of Chief Executive Officer Per Section 302
                            Of The Sarbanes-Oxley Act

I, Susan N. Story, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Gulf Power Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                               /s/  Susan N. Story
                          -----------------------------
                                 Susan N. Story
                      President and Chief Executive Officer

                                      116
<PAGE>


                               GULF POWER COMPANY
            Certification Of Chief Financial Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Ronnie R. Labrato, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Gulf Power Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                              /s/ Ronnie R. Labrato
                                Ronnie R. Labrato
             Vice President, Chief Financial Officer and Comptroller

                                      117

<PAGE>


                            MISSISSIPPI POWER COMPANY

                                   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   Michael D. Garrett
          President and Chief Executive Officer
          (Principal Executive Officer)

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

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


                                                        Date:  May 13, 2003
                                      118

<PAGE>


                            MISSISSIPPI POWER COMPANY
            Certification Of Chief Executive Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Michael D. Garrett, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Mississippi Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                             /s/ Michael D. Garrett
                               Michael D. Garrett
                      President and Chief Executive Officer

                                      119
<PAGE>


                            MISSISSIPPI POWER COMPANY
            Certification Of Chief Financial Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Michael W. Southern, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Mississippi Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                             /s/ Michael W. Southern
                               Michael W. Southern
              Vice President, Chief Financial Officer and Treasurer

                                      120

<PAGE>


                       SAVANNAH ELECTRIC AND POWER COMPANY

                                   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.

          SAVANNAH ELECTRIC AND POWER COMPANY

     By   A. R. James
          President and Chief Executive Officer
          (Principal Executive Officer)

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

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

                                                           Date:  May 13, 2003



                                      121
<PAGE>


                       SAVANNAH ELECTRIC AND POWER COMPANY
            Certification Of Chief Executive Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, A. R. James, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Savannah Electric
     and Power Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                                 /s/ A. R. James
                                   A. R. James
                      President and Chief Executive Officer

                                      122
<PAGE>


                       SAVANNAH ELECTRIC AND POWER COMPANY
            Certification Of Chief Financial Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Kirby R. Willis, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Savannah Electric
     and Power Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                               /s/ Kirby R. Willis
                                 Kirby R. Willis
              Vice President, Chief Financial Officer and Treasurer

                                      123
<PAGE>



                             SOUTHERN POWER COMPANY

                                   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.

          SOUTHERN POWER COMPANY

     By   William P. Bowers
          President and Chief Executive Officer
          (Principal Executive Officer)

     By   Cliff S. Thrasher
          Senior Vice President, Comptroller and Chief Financial Officer
          (Principal Financial and Accounting Officer)

                                                          Date:   May 13, 2003

                                      124
<PAGE>


                             SOUTHERN POWER COMPANY
            Certification Of Chief Executive Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, William P. Bowers, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Southern Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                             /s/ William Paul Bowers
                                William P. Bowers
                      President and Chief Executive Officer

                                      125
<PAGE>


                             SOUTHERN POWER COMPANY
            Certification Of Chief Financial Officer Per Section 302
                           Of The Sarbanes-Oxley Act

I, Cliff S. Thrasher, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Southern Power
     Company;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including
         its consolidated subsidiaries, is made known to us by others within
         those entities, particularly during the period in which this quarterly
         report is being prepared;
     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;
5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):
     a)  all significant deficiencies in the design or
         operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report
         financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and
     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.
Date:  May 13, 2003
                              /s/ Cliff S. Thrasher
                                Cliff S. Thrasher
         Senior Vice President, Comptroller and Chief Financial Officer

                                      126